benaj
Member of DD Central
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Post by benaj on Aug 7, 2019 14:21:59 GMT
Current queues adding up to 13ml+, what's going on?
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tyrex
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Post by tyrex on Aug 7, 2019 15:28:46 GMT
Been wondering the same.
After reading the stories about FC's liquidity (and speaking to my father who has currently waited 80+ days to access his money), it alleviates the worry of not being to sell-out if one needs to, I guess.
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Stonk
Stonking
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Post by Stonk on Aug 7, 2019 16:03:49 GMT
Current queues adding up to 13ml+, what's going on?
Maybe a chunk of the money exiting FC is arriving on RS.
It's a pity, because it's around this time of year when rates on RS usually start to improve.
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Post by propman on Aug 7, 2019 16:40:38 GMT
Current queues adding up to 13ml+, what's going on?
Maybe a chunk of the money exiting FC is arriving on RS.
It's a pity, because it's around this time of year when rates on RS usually start to improve.
For whatever reason the amount lent has decreased over the last month and a half. In addition there have been a .ot of early repayments (atleast on my portfolio) over this period. I suspect much of this money was put back on the market. The net effect is that funds placed on the market have exceeded those lent on it and the difference has increased the funds waiting to be matched.
Not sure whether this is increased caution of borrowers (perhaps B~@xit fear) &/or a loss of competitiveness of RS. The reality is that effectively the large institutions have to pay for all funds deposited and so they are incentivised to lend at whatever rate they can get so long as this is expected to more than cover the costs of default (marginal cost of lending is negligible as part of overheads and cost of deposit capital in very short term whether lent or not). If lending remains low they can cut rates to discourage deposits, but this must be publicised in advance and so is only done if they think the change is going to continue. Lower rates elsewhere will make RS less competitive and so less people will both be atracted by published rates as well as a higher proportion refusing the loan offerred to accept an actual or anticipated cheaper loan elsewhere.
Recent data has shown that retail activity has been lower than expected. Also car sales are down. If people spend less they need to borrow less. Of course there are always plenty looking to borrow, but the impact is felt in the credit worthy borrowers. To be likely to repay a borrower has to have more income than they require. It is these people who are able to cut spending!
There is some rebalancing as the average RS rate decreases making them more competitive, so the reduction doesn't seem to be that dramatic. However the majority of people here are only lending when higher rates are achieved and so funds have built up above the rates that have been lent and most of us have lent little or nothing.
Apologiies in the egg sucking lesson
- PM
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Stonk
Stonking
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Post by Stonk on Aug 7, 2019 17:59:21 GMT
Maybe a chunk of the money exiting FC is arriving on RS.
It's a pity, because it's around this time of year when rates on RS usually start to improve.
For whatever reason the amount lent has decreased over the last month and a half. In addition there have been a .ot of early repayments (atleast on my portfolio) over this period. I suspect much of this money was put back on the market. The net effect is that funds placed on the market have exceeded those lent on it and the difference has increased the funds waiting to be matched.
Not sure whether this is increased caution of borrowers (perhaps B~@xit fear) &/or a loss of competitiveness of RS. The reality is that effectively the large institutions have to pay for all funds deposited and so they are incentivised to lend at whatever rate they can get so long as this is expected to more than cover the costs of default (marginal cost of lending is negligible as part of overheads and cost of deposit capital in very short term whether lent or not). If lending remains low they can cut rates to discourage deposits, but this must be publicised in advance and so is only done if they think the change is going to continue. Lower rates elsewhere will make RS less competitive and so less people will both be atracted by published rates as well as a higher proportion refusing the loan offerred to accept an actual or anticipated cheaper loan elsewhere.
Recent data has shown that retail activity has been lower than expected. Also car sales are down. If people spend less they need to borrow less. Of course there are always plenty looking to borrow, but the impact is felt in the credit worthy borrowers. To be likely to repay a borrower has to have more income than they require. It is these people who are able to cut spending!
There is some rebalancing as the average RS rate decreases making them more competitive, so the reduction doesn't seem to be that dramatic. However the majority of people here are only lending when higher rates are achieved and so funds have built up above the rates that have been lent and most of us have lent little or nothing.
Apologiies in the egg sucking lesson
- PM
Sure, that is all true enough and explains a longer term downward trends in rates and general availability of lender money above the prevailing rate.
But RS also sees fairly dramatic short-term fluctuations which are not explained by larger economic factors. It was, for instance, only 5 or 6 weeks ago that the RS markets ran extremely low on lender funds, and virtually ran out on Rolling (causing matches up to 10.0%)! I wouldn't say £13M is particularly large, actually. In normal lending conditions, I've seen such queues used up during the space of a couple of weeks.
RS has historically also been prone to a pronounced "ISA season" effect from April to around August or September. With the new MR methodology, this effect may be delayed this year, or smoothed away entirely.
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ceejay
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Post by ceejay on Aug 7, 2019 22:39:27 GMT
Maybe a chunk of the money exiting FC is arriving on RS.
...
... surely the money exiting FC is coming out at such a slow rate that it couldn't even amount to a trickle, never mind a flood?!
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benaj
Member of DD Central
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Post by benaj on Aug 9, 2019 10:16:43 GMT
The queues are growing, totalling £15mil+, sign of investor confidence in this platform or is it something else?
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Post by propman on Aug 9, 2019 11:51:35 GMT
Not too bad if you ignore rolling. Question is how much in rolling is just waiting to jump into other markerts when rates pick up?
PS: Back to £13m, 5.9% on 5yr and 4.9% on annual with weekend to run after a very good Friday.
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benaj
Member of DD Central
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Post by benaj on Aug 15, 2019 11:03:03 GMT
Not too bad if you ignore rolling. Question is how much in rolling is just waiting to jump into other markerts when rates pick up?
PS: Back to £13m, 5.9% on 5yr and 4.9% on annual with weekend to run after a very good Friday.
Something not quite right with the rolling market. 25000+ lend orders sitting around 3.4-3.5% for more than a week. It makes me wonder are they really dumb money, reinvestment orders people not bothered about queuing, or something else we didn't know about.
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Stonk
Stonking
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Post by Stonk on Aug 15, 2019 13:16:33 GMT
Not too bad if you ignore rolling. Question is how much in rolling is just waiting to jump into other markerts when rates pick up?
PS: Back to £13m, 5.9% on 5yr and 4.9% on annual with weekend to run after a very good Friday.
Something not quite right with the rolling market. 25000+ lend orders sitting around 3.4-3.5% for more than a week. It makes me wonder are they really dumb money, reinvestment orders people not bothered about queuing, or something else we didn't know about. Isn't that a few days worth of reinvestment orders at Market Rate that have not matched? There's no rule that says that a reinvestment order has to match straight away, or even ever. I suppose there's more money repaying than can be used up by the demand for new loans.
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benaj
Member of DD Central
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Post by benaj on Aug 15, 2019 13:23:33 GMT
Another possibility could be some investors do not know to modify "set the rate" from reinvestment and do not want to cancel order yet.
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Post by propman on Aug 16, 2019 10:54:23 GMT
Interestingly this morning the money on rolling has declined nearly £3m but thiws week's lending has only increased by £250k. That is either a timing issue on stats, or a huge amount repaid, or have I missed a possibility?
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