rogedavi
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Post by rogedavi on Nov 28, 2019 12:31:19 GMT
The investor rates for Flex/Growth have reduced from 5/6.5% to 3.8%/5.4%.
That's quite the reduction and a very high spread relative to the weighted average APR charged to borrowers of 14.2%.
I'm hypothesising this explains the increased future income with more of that spread being diverted to bolster the shield?
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Post by jono75 on Nov 28, 2019 12:48:52 GMT
I noticed that. Like you say, I guess this is so they can filter some of that into the shield? Kind of regretting sitting in the fence to see if the shield goes up before investing with LW, but being cautious in P2P is probably for the best.
If it mean future investments are better protected then I'm all all for it, as long as it means the risk is still worth the reward. I remember getting these 3.5 a few years ago in FSCS protected fixed term bonds, it's not a good time for savers and getting worse with the mortgage rate war holding them down (so I read).
I think 3.8 is a bit too low for P2P risks. Ratesetter are bringing their rates down too.
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rogedavi
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Post by rogedavi on Nov 28, 2019 12:57:40 GMT
locked in and running down.
like you say, if the additional spread is being diverted, that protects my 6.5% somewhat at the expense of new investors.
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Post by wiseclerk on Nov 28, 2019 13:10:47 GMT
I have updated the information for Lending Works in the comparison table of IFISAs
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IFISAcava
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Post by IFISAcava on Nov 28, 2019 13:33:53 GMT
The investor rates for Flex/Growth have reduced from 5/6.5% to 3.8%/5.4%. That's quite the reduction and a very high spread relative to the weighted average APR charged to borrowers of 14.2%. I'm hypothesising this explains the increased future income with more of that spread being diverted to bolster the shield? Just look at the default rates - something had to give
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Post by closetotheedge on Nov 28, 2019 13:47:07 GMT
If the rate has dropped they why has the 'interest shortfall ' element of my cost to sell not also reduced. I had assumed it would but it is shown as the same as it was prior to the rate drop.
Any ideas?
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rogedavi
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Post by rogedavi on Nov 28, 2019 14:18:55 GMT
The investor rates for Flex/Growth have reduced from 5/6.5% to 3.8%/5.4%. That's quite the reduction and a very high spread relative to the weighted average APR charged to borrowers of 14.2%. I'm hypothesising this explains the increased future income with more of that spread being diverted to bolster the shield? Just look at the default rates - something had to give Totally agree. This is the least worst option. Although part of me was hoping that LW big update would be a cash injection into the PF like GS did.
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Post by propman on Nov 28, 2019 15:59:17 GMT
I have updated the information for Lending Works in the comparison table of IFISAs
It would be useful to know if provision fund and amount of coverage where it exists to understand likelihood of variability of returns.
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mickj
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Post by mickj on Nov 28, 2019 16:21:47 GMT
Just logged in and noticed this drop, not to happy with money waiting for growth, offering 6.5% when deposit made. ho well.
Cannot understand why the sudden switch, last email was offering 5 & 6.5% on 22nd, think it would have been nice to have been given a bit of advance notice or an email this morning or something.
Edit: slapped wrist here, email popped up just now, improving shield etc.
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rogedavi
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Post by rogedavi on Nov 28, 2019 16:36:31 GMT
If I am reading that email correctly - there will be a haircut on interest from existing loan portfolios as well?
No fee to get out between now and Jan 2020.
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Post by carol167 on Nov 28, 2019 16:38:08 GMT
New rates are still more than RS or Zopa and in some ways it's comforting as we've been asking for a while how LW could stay sustainable with such high rates.
Worth noting that the email today says the higher rates are still applicaple to the end of next week (despite what you see in the UI).
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trium
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Post by trium on Nov 28, 2019 16:43:53 GMT
Very peed off having waited ages to almost get an ISA transfer completed. I now want to cancel that transfer but it's too late. Do I want to do another ISA transfer out? Suppose I'll have to. Not happy at all
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jlend
Member of DD Central
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Post by jlend on Nov 28, 2019 16:46:28 GMT
If I am reading that email correctly - there will be a haircut on interest from existing loan portfolios as well? No fee to get out between now and Jan 2020. That is how I read it. Reduction in existing and new loans kicks in on 1st Jan.
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alanh
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Post by alanh on Nov 28, 2019 17:06:31 GMT
No email yet for me - am I the only one?
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rogedavi
Member of DD Central
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Post by rogedavi on Nov 28, 2019 17:12:41 GMT
If I am reading that email correctly - there will be a haircut on interest from existing loan portfolios as well? No fee to get out between now and Jan 2020. That is how I read it. Reduction in existing and new loans kicks in on 1st Jan. "These changes will also result in an adjustment to the interest rates on the existing loan portfolio, with interest rates reducing from an average of 5.2% p.a. to 4.8% p.a." which implies a 0.4% haircut across the board retrospectively (and 1.1% on new/re-investments). My reading is that the PF was soon to deplete and they've calibrated these figures to get it back on track. I'm cool with that to be honest. I'm not so happy about the retrospective haircut, but I guess they know a lot of people would just go into run down mode following the announcement. Now I have a decision to make in the next month on whether 5.4% is an appropriate return (with a stronger shield) for the risk.
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