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Post by Matthew on Feb 12, 2020 18:11:55 GMT
Dear forum users,
In response to your recent enquiries, we have copied a communication that our customer services team have sent to some customers in response to their enquiries this morning.
We understand you are concerned about the reduction in interest rates on your existing loans following the adoption of Lending Works’ new terms and conditions. As we notified customers in November 2019, we adopted a new model that enables variability of interest rates to account for the performance of the underlying loan portfolio. This new model ensures that the Lending Works Shield can continue to perform its function, irrespective of the wider economic conditions.
We’re writing to inform you that the underlying interest rates payable to retail investors on 2018 and 2019 loans will be increased by an average of 1.57% with immediate effect. We continue to monitor the wider economic conditions and the performance of the loan portfolio and will make further adjustments as required in the future. The annualised returns you are receiving over the life of your investment have not changed and are still as displayed on the chart in your Dashboard - however, this change affects the profile of when you receive that interest.
This is not a change to our new underlying model and our new terms and conditions are not being amended. We believe that our model is one that can deliver the most resilient and consistent outcome for retail investors, and we are committed to it. The adjustment we have made today is just a natural continuation of this new model.
In response to some customer enquiries, we do also want to highlight how we intend the new model to work in the future too. With the 2014 to 2019 loan cohorts, future expected interest rate adjustments, if any, will be incremental, and once again will not affect the returns displayed on the chart in your Dashboard over the life of the investment. Any changes to lifetime returns will continue to be communicated on a quarterly basis. With regard to all future cohorts, from 2020 onwards, we do not expect any significant adjustments to interest rates. Now we have the new model in place, if there is a reduction in interest rates required, we can do so well in advance and gradually, to smooth out any fluctuations in loan portfolio performance over a longer period of time.
Many thanks
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Post by carol167 on Feb 12, 2020 18:17:42 GMT
Does that mean that those who have cashed out in the last few weeks will be due a refund ??
or
those left going forward will be charged even more to cash out ??
Why does it feel like LW are making it up as they go along ?
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IFISAcava
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Post by IFISAcava on Feb 12, 2020 18:26:57 GMT
Balls - so not only did I take a huge 5% hit, if I had waited a week longer the interest shortfall would have been 1.5% less? Or I might have stayed as rates were closer to what we thought we would be getting?
I think we recently-very-happy-and-now-disgruntled-waiting-to-be-tempted-back investors are likely to be even more disgruntled and even less likely to be tempted back now!
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Post by carol167 on Feb 12, 2020 18:34:54 GMT
2014 cohort ?
What am I missing ?
5 year loans from 2014 would have finished in 2019.
Why on earth would they have any bearing now ?
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Post by dan1 on Feb 12, 2020 18:50:56 GMT
The way I interpret the update is that those cashing out between 1 Jan 2020 and today are no better or worse off. If the 1.57% had been applied from 1 Jan 2020 then those cashing out would have received 1.57% more interest but their interest shortfall fee would have been more by the same amount (all percentages annualised, of course). All LW have done is to amend the schedule of rate reductions to replenish the Shield, they'll be taken more gradually over the remaining period of the loan.
Or, have I misunderstood?
It doesn't change the fact that you'd of been miles better off cashing out in December.
Edit: those who haven't sold up but requested sell-out fees pre today should be able to confirm this over the coming weeks - as current rates increase so should interest shortfall fees.
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squid
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Post by squid on Feb 12, 2020 18:53:53 GMT
''Does that mean that those who have cashed out in the last few weeks will be due a refund ??'' I very much expect so - this is the fair and simple P2P platform.
''Why does it feel like LW are making it up as they go along ?'' Agreed - totally comes across as such.
My hit was over 6.5%. Thank you LW.
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IFISAcava
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Post by IFISAcava on Feb 12, 2020 18:55:38 GMT
The way I interpret the update is that those cashing out between 1 Jan 2020 and today are no better or worse off. If the 1.57% had been applied from 1 Jan 2020 then those cashing out would have received 1.57% more interest but their interest shortfall fee would have been more by the same amount (all percentages annualised, of course). All LW have done is to amend the schedule of rate reductions to replenish the Shield, they'll be taken more gradually over the remaining period of the loan. Or, have I misunderstood? It doesn't change the fact that you'd of been miles better off cashing out in December. Interest shortfall would have been LESS as the rates on old loans would be closer to the rates on new loans.
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macq
Member of DD Central
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Post by macq on Feb 12, 2020 18:58:17 GMT
Balls - so not only did I take a huge 5% hit, if I had waited a week longer the interest shortfall would have been 1.5% less? Or I might have stayed as rates were closer to what we thought we would be getting? I think we recently-very-happy-and-now-disgruntled-waiting-to-be-tempted-back investors are likely to be even more disgruntled and even less likely to be tempted back now! But at least you will have a warm glow knowing as One of the people who either complained or voted with their feet that you helped the people who do not read forums or seen the news and had not realised yet what was happening and who now think LW has done this all off their own back and how wonderful they are
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Post by dan1 on Feb 12, 2020 19:03:55 GMT
The way I interpret the update is that those cashing out between 1 Jan 2020 and today are no better or worse off. If the 1.57% had been applied from 1 Jan 2020 then those cashing out would have received 1.57% more interest but their interest shortfall fee would have been more by the same amount (all percentages annualised, of course). All LW have done is to amend the schedule of rate reductions to replenish the Shield, they'll be taken more gradually over the remaining period of the loan. Or, have I misunderstood? It doesn't change the fact that you'd of been miles better off cashing out in December. Interest shortfall would have been LESS as the rates on old loans would be closer to the rates on new loans. No, these are temporary rates, they don't apply for the remainder of the loan. That's my understanding at least. All LW have done is re-profile the rates over the lifetime of the loan. Remember, rates are now officially variable, not only over the lifetime of the loan but also throughout the loans life. It's this last point that I'm not sure most lenders have grasped yet? Edit: "temporary" is a poor choice of word in this context. Think of it this way, the Shield will be replenished at a slower rate than it would of done prior to the announcement today.
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macq
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Post by macq on Feb 12, 2020 19:23:27 GMT
Interest shortfall would have been LESS as the rates on old loans would be closer to the rates on new loans. No, these are temporary rates, they don't apply for the remainder of the loan. That's my understanding at least. All LW have done is re-profile the rates over the lifetime of the loan. Remember, rates are now officially variable, not only over the lifetime of the loan but also throughout the loans life. It's this last point that I'm not sure most lenders have grasped yet? Edit: "temporary" is a poor choice of word in this context. Think of it this way, the Shield will be replenished at a slower rate than it would of done prior to the announcement today. Think temporary is a good word as its only slower this week/month it could go quicker with the next announcement or even fast in a worst case (i assume as i have kinda given up)
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Post by jojo on Feb 12, 2020 19:26:04 GMT
Does that mean that those who have cashed out in the last few weeks will be due a refund ??
or
those left going forward will be charged even more to cash out ??
Why does it feel like LW are making it up as they go along ?
Why would they give refund to people that have decided to leave at the worst time, maybe you withdraw because you needed the money, that is unfortunate but it was clearly announced that the worst was January and it should get better over the next 6 months . We have all read the same comments , your interpretation was to leave and cash out , mine was to be patient and stay invested for the next 6 months, to see if improvement was done and then decide what to do. I think it is too easy to decide to cash out on panic, spreading also worries to others investors because you can't hold your investment and you are not able to be patient for 6 months, and now you want the money back, I don't see any reason why they should.
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alanh
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Post by alanh on Feb 12, 2020 19:33:45 GMT
No mention of the shield in that. They moved from monthly updates to quarterly at the end of November so we are due an update in the next week or so. At the rate the cash balance was falling there will be absolutely nothing left in it now except the promise of "future income". Will be interesting to see if the multitude of new hidden fees have been diverted to it.
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IFISAcava
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Post by IFISAcava on Feb 12, 2020 20:46:39 GMT
Does that mean that those who have cashed out in the last few weeks will be due a refund ??
or
those left going forward will be charged even more to cash out ??
Why does it feel like LW are making it up as they go along ?
, maybe you withdraw because you needed the money, that is unfortunate but it was clearly announced that the worst was January and it should get better over the next 6 months . We have all read the same comments , your interpretation was to leave and cash out , mine was to be patient and stay invested for the next 6 months, to see if improvement was done and then decide what to do. I think it is too easy to decide to cash out on panic, spreading also worries to others investors because you can't hold your investment and you are not able to be patient for 6 months, and now you want the money back, I don't see any reason why they should. That applied to people leaving in December too, who got a much better deal. Like I said, I don't expect anything, I made decision on the available information and that's that. I am just saying that this won't do anything to entice people back who have left - it will do the opposite. It will however help keep people who haven't yet left. That they have done it suggests to me that there has been or they anticipate there being a significant outflow of cash.
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IFISAcava
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Post by IFISAcava on Feb 12, 2020 20:52:09 GMT
Interest shortfall would have been LESS as the rates on old loans would be closer to the rates on new loans. No, these are temporary rates, they don't apply for the remainder of the loan. That's my understanding at least. All LW have done is re-profile the rates over the lifetime of the loan. Remember, rates are now officially variable, not only over the lifetime of the loan but also throughout the loans life. It's this last point that I'm not sure most lenders have grasped yet? Edit: "temporary" is a poor choice of word in this context. Think of it this way, the Shield will be replenished at a slower rate than it would of done prior to the announcement today. OK, so the interest shortfall is calculated over the remainder of the loan? That means that the interest rate shortfall won't be going down, although may gradually amortise as such over the next 5 years as the loans get closer to maturity. It also means that current lenders are getting a 5% worse deal over the lifetime of their loans than new lenders.
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Post by jojo on Feb 12, 2020 20:54:18 GMT
Why would they give refund to people that have decided to leave at the worst time, maybe you withdraw because you needed the money, that is unfortunate but it was clearly announced that the worst was January and it should get better over the next 6 months . We have all read the same comments , your interpretation was to leave and cash out , mine was to be patient and stay invested for the next 6 months, to see if improvement was done and then decide what to do. I think it is too easy to decide to cash out on panic, spreading also worries to others investors because you can't hold your investment and you are not able to be patient for 6 months, and now you want the money back, I don't see any reason why they should. Like I said, I don't expect anything, I made decision on the available information and that's that. I am just saying that this won't do anything to entice people back who have left - it will do the opposite. It will however help keep people who haven't yet left. That they have done it suggests to me that there has been or they anticipate there being a significant outflow of cash.Exactly, I have wish i had withdraw in December but I never asked LW to have the difference because i didn't do it, same for people who decided to draw since 1st of Jan. On the significant outflow cash I don't think so, I am following closely the LW statistics and is seems only 600 k left over a month, btw, like i said on one my post, they have 6800 investors and probably 50 max that was complaining, so everything is all relative.
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