jlend
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Post by jlend on Oct 3, 2019 20:42:03 GMT
You can set your rate at a maximum of 5% above the Going Rates on the new products You can cancel any unmatched orders fee free at any time on the new and old products.
I may be out of date with how the Rolling market worked at the end. I barely used it for the last 18 months, and it underwent several major changes.
To clarify, suppose I have a loan on Max for £1,000 and it makes a standard monthly repayment of £50 consisting of £20 capital and £30 interest. I will still have the same loan to the same borrower, now with £980 outstanding. On Old Rolling, you could extract the £30 interest component, but wasn't it the case that the £20 capital was also forcibly reinvested somehow? I see mention of un-cancellable orders -- or did RS backtrack on that? Essentially, what I'm asking is, in this scenario, if I've set "reinvest at my rate of 10%", what loans and orders will I end up with?
Another thing. On Old Rolling, each month the loan was re-lent to the same borrower by means of a hacky mess of transactions and a brand new contract number. I wonder whether the 3 new products will behave like that? Has anyone seen a Plus or Max repayment schedule yet? Does it show a single full repayment in a month's time, or a full schedule of monthly payments? The tester loan I bought on Access today has a single full repayment in a month's time, so it's going to behave like the Old Rolling mess.
In your example you will have a loan with 980 remaining, and a lend order of 50 pounds at 10%, which is likely to be unmatched that you can cancel fee free.
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robski
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Post by robski on Oct 4, 2019 8:17:48 GMT
Well at the moment the new system seems to be working as intended, its dropped rates I wonder how many will not pay proper attention and leave it, how many will adjust their expectations, and how many will go and for now withdraw Personally I still think people are willing to lend in access for too low a rate, I get some short term benefits, but I mean the vast bulk of the money thats rolling over month in month out I do think the 1% and 2% are probably fair for the extra risk of liquidity the delay or penalty to withdraw could bring compared to access, however the same principle applies for me, the access rate is too low, so teh premium doesnt fix the underlying issue and as such all 3 are currently targeted for a return thats below the risk.
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Post by Deleted on Oct 4, 2019 8:42:15 GMT
Well at the moment the new system seems to be working as intended, its dropped rates I wonder how many will not pay proper attention and leave it, how many will adjust their expectations, and how many will go and for now withdraw Personally I still think people are willing to lend in access for too low a rate, I get some short term benefits, but I mean the vast bulk of the money thats rolling over month in month out I do think the 1% and 2% are probably fair for the extra risk of liquidity the delay or penalty to withdraw could bring compared to access, however the same principle applies for me, the access rate is too low, so teh premium doesnt fix the underlying issue and as such all 3 are currently targeted for a return thats below the risk. I agree - my target returns would be at least 4%, 5% and 6% in Access, Plus and Max respectively. I could achieve that in Rolling, 1yr and 5yr relatively easily.
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groon
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Post by groon on Oct 4, 2019 10:58:07 GMT
I wonder how many will not pay proper attention and leave it, how many will adjust their expectations, and how many will go and for now withdraw Me, for one Until / unless rates improve, I'll be withdrawing repayments.
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Post by bernythedolt on Oct 4, 2019 12:38:27 GMT
Is it me, or does the new single pool of loan requests now remove all control we used to have over the duration (term) of a loan we were willing to accept? Previously we could choose whether we were lending for one year, five years or on a one month rolling basis. But, for new investors (and in due course all of us), no longer.
It strikes me that we're now matched to a random term, and could wind up being matched to a 5 year loan at 3% (from the Access queue) or a 1 year loan at 5% (from the Max queue), or any random combination. We have lost the granularity we used to enjoy. Surely the term of a loan shouldn't be just a matter of luck?
Where this could matter is to someone who wants to commit their money for just one year, let's say, or maybe two years. If they select Max (the only product now offering a return anywhere near commensurate with the investment risk), it is a matter of pure luck whether they match a 1 year loan (where, by maintaining a reinvestment setting of (going rate + 5%), they could accumulate repayments and withdraw everything free of fees after the year is up), or be unlucky and be matched to a 5 year loan, whereupon withdrawing their capital after one year will incur a fee that wipes out much of the interest gained.
Am I missing something?
I am uncomfortable with this non-deterministic approach to lending and predict Ratesetter have shot themselves in the foot with this latest venture - many new investors will surely look elsewhere?
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ceejay
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Post by ceejay on Oct 4, 2019 13:46:04 GMT
... Am I missing something? I am uncomfortable with this non-deterministic approach to lending and predict Ratesetter have shot themselves in the foot with this latest venture - many new investors will surely look elsewhere? I could be wrong, but I think that what you may be missing is that the term of the loan is now more or less irrelevant. In 1yr/5yr, at the end of the term the loan ended, you got your money back, and it was your choice as to whether you started again. Now, all returns are automatically reinvested, forever, and you have to pay an exit fee to get it out. I can see no benefit to these new products and my money will be leaving as loans end.
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Post by Deleted on Oct 4, 2019 13:48:39 GMT
You can set your reinvestment rate very high and then cancel the order and get repayments out that way. It doesn't fix the unknown term issue though.
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Post by bernythedolt on Oct 4, 2019 14:27:55 GMT
... Am I missing something? I am uncomfortable with this non-deterministic approach to lending and predict Ratesetter have shot themselves in the foot with this latest venture - many new investors will surely look elsewhere? I could be wrong, but I think that what you may be missing is that the term of the loan is now more or less irrelevant. Thanks, that is the issue for me - RS are making the loan term irrelevant, but to many investors it could be a relevant factor. If I'm going to be stuffed with a rate as low as 5%, I certainly wouldn't want that dragging on for 5 years with no fee-free escape. I'd say that's too risky, whereas I might be inclined to accept 5% on a 1 year loan. I much preferred having the choice and see no good reason for removing it in a free market of matching lenders to borrowers, which used to be the RS model.
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Post by jono75 on Oct 4, 2019 14:38:39 GMT
I agree about the unknow contract lengths, this is why I liked the 1yr product, it's a nice length term, don't have to worry about the rate like you do with rolling/access and can get a resonable rate (all of my 1yr loans are 5%), I like that certainty (other than early repayments of course).
The access is heavily pushed at 3% and that's what new lenders money will likely be lent at. That's too low for P2P risks, can't imagine that we'll get many bites above that or lots of cash drag.
The other two products are either still too low at 4% or too much of a mandatory hit.
At the risk of seeming dim, I'm not really understanding the combined lender queues in the products and how RS alloced between the three. How can the the lender offers be the same amount in all three but at different rates?
Currently the best borrower offer is 2.9%, how will anything ever get lent in plus or max. It doesn't seem very organic any more.
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Post by bernythedolt on Oct 4, 2019 15:31:54 GMT
I agree about the unknow contract lengths, this is why I liked the 1yr product, it's a nice length term, don't have to worry about the rate like you do with rolling/access and can get a resonable rate (all of my 1yr loans are 5%), I like that certainty (other than early repayments of course). The access is heavily pushed at 3% and that's what new lenders money will likely be lent at. That's too low for P2P risks, can't imagine that we'll get many bites above that or lots of cash drag. The other two products are either still too low at 4% or too much of a mandatory hit. At the risk of seeming dim, I'm not really understanding the combined lender queues in the products and how RS alloced between the three. How can the the lender offers be the same amount in all three but at different rates? Currently the best borrower offer is 2.9%, how will anything ever get lent in plus or max. It doesn't seem very organic any more. Glad it's not just me who thinks there's now too much smoke and mirrors. I just cannot fathom the RS allocation, as you say, and it used to be so simple. RS's current P2P risk/reward profile is too high for me also. I expect them to haemorrhage existing investors and find it more difficult to attract new money to this new unfathomable and less flexible model.
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sl75
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Post by sl75 on Oct 4, 2019 15:39:39 GMT
Currently the best borrower offer is 2.9%, how will anything ever get lent in plus or max. It doesn't seem very organic any more. The 3 markets are just 3 different views of the same market.
You're just choosing your preferred balance between interest rate and the cost of accessing funds early.
So a 2.9% offer in "access" is equivalent to 3.9% in "plus" or 4.9% in "max".
Behind the scenes the borrower would be paying a higher overall rate, so in effect, this just changes whether RateSetter get all their spread up-front, or have part of it deferred until you decide to exit.
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Post by ruralres66 on Oct 4, 2019 15:51:01 GMT
I have now begun to work out what is actually going on!
I am so glad I put all available ££ into the 1 year market and still have a chance to determine the outcome. I have managed 4.4% today and yesterday. Not great but better than 3.9%......
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Post by nutfield on Oct 4, 2019 15:55:53 GMT
With Zopa's rates and performance all over the place, LW having a suspiciously long queue, and RS effectively reducing rates by about a whole one per cent perhaps permanently, it makes the whole concept of this type of p2p lending look a bit dodgy. Perhaps there are just not enough reliable borrowers out there to support this savings/investment model.
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macq
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Post by macq on Oct 4, 2019 16:06:21 GMT
i did post a few weeks back and i don't think i'v seen anything to change my mind and the phrase smoke & mirrors used a few post's back sums it up to me.For most people they have an idea of how long they want to invest for so they went rolling,1 or 5 but now if you think its less then a year you go access but if looking longer term and you accept the new products then you must go Max as the maths/fee's on Plus seem to make it worthless over a year and unless i'm wrong they could have made the product with just 2 bands the same as LW (but guessing LW got there first and they did not want to look like their copying them)
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Post by bernythedolt on Oct 4, 2019 16:47:28 GMT
Currently the best borrower offer is 2.9%, how will anything ever get lent in plus or max. It doesn't seem very organic any more. The 3 markets are just 3 different views of the same market.
You're just choosing your preferred balance between interest rate and the cost of accessing funds early.
So a 2.9% offer in "access" is equivalent to 3.9% in "plus" or 4.9% in "max".
Behind the scenes the borrower would be paying a higher overall rate, so in effect, this just changes whether RateSetter get all their spread up-front, or have part of it deferred until you decide to exit.
Agreed, three queues into the same market, but how does RS allocate their loans to the three queues? Will they match and deplete all the lender offers sitting in Access, all the way up to 3.9%, before those waiting at 3.9% in Plus even get a look in? Then ditto depleting Plus until Max starts getting serviced at 4.9%? This maximises profit for RS, assuming the borrower's rate is set irrespective of the queue (and I think we have to make that assumption). In the previous scheme, the term of the loan would determine the market (Rolling, 1yr or 5 yr) meaning those waiting at the foot of the 1yr or 5yr queue would be more readily serviced surely? I can't help feeling this change is not to the benefit of investors, but to RS. Without proper explanation by RS it's all conjecture, and the lack of clarity leaves me suspicious. Lenders deserve better than this. I did try researching Plus and Max and it's surprisingly difficult to find anything substantive.
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