scc
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PF
Mar 4, 2020 22:50:49 GMT
Post by scc on Mar 4, 2020 22:50:49 GMT
The PF in terms of available cash is very low and will soon vanish when defaults created by Covid-19 hit home over the next few weeks/months. Cannot see RS avoiding a lock in of lenders plus a haircut. Been with RS since the beginning and made great returns however decided to cash out all of my lending last Friday. Made the request in the morning Friday, money available by the afternoon and back in my bank account this Monday. Very smooth and efficient. Going to stay pretty liquid until this all blows over or not especially as Mrs Dorset and myself are in the high risk age band. If it turns into a V shape recovery then we are well positioned to take advantage. Mirrors my views and experience. Cashed out over the last few days. About 150 quid left in sub £10 loans.
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IFISAcava
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Post by IFISAcava on Mar 4, 2020 23:10:43 GMT
I got £32 from the PF. Have never received a penny from the wife 😆. Is no one bothered my the continual depletion of the PF. ICF is down another 3% in Feb. At this rate haircuts will be due in under 6 months time! Looks like turnover is also down. I'm down to 35% of my high watermark on RS and passively withdrawing. I'm not concerned enough to pay to exit yet, but I'm getting close. Wouldn't want to be trapped like many on FC when there are so much better offerings out there. Definitely bothered, and doing/considering exactly the same as you. I'm bothered, but I have an average 7.1% in Access, and that's hard to give up! Then again, it's in Access rather than 5 year for a good reason, and maybe this is the good reason.
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IFISAcava
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PF
Mar 4, 2020 23:20:39 GMT
Post by IFISAcava on Mar 4, 2020 23:20:39 GMT
Having (partially) missed the free exit boat at LW, I am loathe to make the same mistake.
That PF is rapidly diminishing, and 7.1% is only 2-3% higher than I might get elsewhere for an instant access account (e.g. AC, LP).
Very tempting to get out now... anyone want to argue me out of it?
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Nomad
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Post by Nomad on Mar 4, 2020 23:53:25 GMT
Having (partially) missed the free exit boat at LW, I am loathe to make the same mistake. That PF is rapidly diminishing, and 7.1% is only 2-3% higher than I might get elsewhere for an instant access account (e.g. AC, LP). Very tempting to get out now... anyone want to argue me out of it? I'm in two minds, so I've withdrawn about half my funds.
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aju
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PF
Mar 5, 2020 0:02:22 GMT
Post by aju on Mar 5, 2020 0:02:22 GMT
my email update says I have been paid c£1,000 since dec 9th, 3 months. My total with RS is about £37k at about 5% average. £330 a month seems an awful lot from the PF! The PF has lost £2.6m in the last 3 months, or 24% of its value. In other words, if it feels like an awful lot, in this case it's because it is an awful lot. I've just checked numbers since 1/12/2019 (just over 3 months) and its not as bad as that is it. 01/12/2019 PF = 9.856M 29/02/2020 PF = 8.254M ( assume that was the date, i've only just seen it today) 1.602M less in PF cash Loss is (1.602/9.856) = 16.26% is that not correct?. Not great though I have to admit.
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Post by Deleted on Mar 5, 2020 8:45:12 GMT
Having (partially) missed the free exit boat at LW, I am loathe to make the same mistake. That PF is rapidly diminishing, and 7.1% is only 2-3% higher than I might get elsewhere for an instant access account (e.g. AC, LP). Very tempting to get out now... anyone want to argue me out of it? The capital cover is high. Even if the interest cover dropped 30% (absolute), interest cover would be 87%. If that meant a 20% haircut on interest, you'd still be getting 5.68% (0.8 x 7.1). Obviously things could get worse than that, but they could also be better eg no reduction at all. The unknown is how sustainable RS becomes after a haircut. In my view, Zopa is in a worse position, as defaults are worse than expected and target returns aren't being achieved, which gave me too much risk for too low a return. That doesn't mean RS is safe though. Having said all that, I've possibly not said enough to talk you out of it! I'm withdrawing rather than cashing in, and have a similar rate on Access to you, but am monitoring closely. I believe interest cover has been as follows (where target is the current target - I know it has been different previously):
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r00lish67
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Post by r00lish67 on Mar 5, 2020 8:58:55 GMT
The PF has lost £2.6m in the last 3 months, or 24% of its value. In other words, if it feels like an awful lot, in this case it's because it is an awful lot. I've just checked numbers since 1/12/2019 (just over 3 months) and its not as bad as that is it. 01/12/2019 PF = 9.856M 29/02/2020 PF = 8.254M ( assume that was the date, i've only just seen it today) 1.602M less in PF cash Loss is (1.602/9.856) = 16.26% is that not correct?. Not great though I have to admit. You're right, I was looking at November's stats (PF = £10.8m), so it's 4 months For a slightly bigger picture, The PF in March 2019 was £14.2m, so we're down 42% from that point. Looking at the spreadsheet from another thread that someone helpfully put up a while back, it's interesting that throughout 2018, PF cash barely budged at all and up until March 2019 it was actually rising. In some ways, this looks a similar story to LW, with PF cash turning downwards and then picking up pace rapidly. In other ways, it's different. RS's stats currently still imply that they should be losing very little each month, and when you look at the loan performance by year, the stats don't seem to reconcile with the deteriorating cash position i.e. barely out of line with expectations. However, given that it's the "actuals" that is a very similar story, and the projections that are different, I'm currently minded to be sceptical. This is where I struggle - if you look at what RS project to come into the PF (£25.7m) versus what they project to come out (£28.9m), or in other words -£3.2m (£25.7m-£28.9m). So if we take that -£3.2m and divide it roughly by the average loan term (28 months), that suggests to me that on average PF cash should be declining by £115k/month (3.2/28). In reality. the last 3 months declines have been £1m, £500k, and this month £1.1m, so we're running at 7 or 8 times this average. Whilst that is just a rough-and-ready calculation, I think that needs some explanation from RateSetter - were there significant one-offs? are we going to revert back to the mean with some PF cash uplifts in the near future? (but if so, why are the forecasts still implying a decline after 3 months of big falls?).
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r00lish67
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Post by r00lish67 on Mar 5, 2020 9:04:38 GMT
Having (partially) missed the free exit boat at LW, I am loathe to make the same mistake. That PF is rapidly diminishing, and 7.1% is only 2-3% higher than I might get elsewhere for an instant access account (e.g. AC, LP). Very tempting to get out now... anyone want to argue me out of it? The capital cover is high. Even if the interest cover dropped 30% (absolute), interest cover would be 87%. If that meant a 20% haircut on interest, you'd still be getting 5.68% (0.8 x 7.1). Obviously things could get worse than that, but they could also be better eg no reduction at all. The unknown is how sustainable RS becomes after a haircut. In my view, Zopa is in a worse position, as defaults are worse than expected and target returns aren't being achieved, which gave me too much risk for too low a return. That doesn't mean RS is safe though. Having said all that, I've possibly not said enough to talk you out of it! I'm withdrawing rather than cashing in, and have a similar rate on Access to you, but am monitoring closely. I believe interest cover has been as follows (where target is the current target - I know it has been different previously): The capital cover is (IMV) an even worse indicator of health than the ICR. Just to take the ICR for the moment - consider that it's quite possible that we could run out of PF cash entirely and still show an ICR over 100% - great! The problem is it relies hugely on their projections, which strangely enough have been improving significantly whilst the actual performance (PF cash) declines significantly. As per my crossing post above, the ICR is only valid if their projections are spot on, but in recent months that assumption appears questionable. The CCR then takes the bloated ICR multiplicator, adds in another projection and then divides that. I mean, how we can simultaneously have 2.5x the amount of capital we need to in the kitty but yet have no money left to service 5% interest? It's bizarre. The above said, I don't currently see significant capital losses. Maybe worst case 10-15% loss if they failed entirely, and more likely a very limp LW-style low single digits interest if we go to that model. Although very much into the realm of speculation now, so DYOR!
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aju
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Post by aju on Mar 5, 2020 9:05:17 GMT
I've just checked numbers since 1/12/2019 (just over 3 months) and its not as bad as that is it. 01/12/2019 PF = 9.856M 29/02/2020 PF = 8.254M ( assume that was the date, i've only just seen it today) 1.602M less in PF cash Loss is (1.602/9.856) = 16.26% is that not correct?. Not great though I have to admit. You're right, I was looking at November's stats (PF = £10.8m), so it's 4 months For a slightly bigger picture, The PF in March 2019 was £14.2m, so we're down 42% from that point. Looking at the spreadsheet from another thread that someone helpfully put up a while back, it's interesting that throughout 2018, PF cash barely budged at all and up until March 2019 it was actually rising. In some ways, this looks a similar story to LW, with PF cash turning downwards and then picking up pace rapidly. In other ways, it's different. RS's stats currently still imply that they should be losing very little each month, and when you look at the loan performance by year, the stats don't seem to reconcile with the deteriorating cash position i.e. barely out of line with expectations. However, given that it's the "actuals" that is a very similar story, and the projections that are different, I'm currently minded to be sceptical. This is where I struggle - if you look at what RS project to come into the PF (£25.7m) versus what they project to come out (£28.9m), or in other words -£3.2m (£25.7m-£28.9m). So if we take that -£3.2m and divide it roughly by the average loan term (28 months), that suggests to me that on average PF cash should be declining by £115k/month (3.2/28). In reality. the last 3 months declines have been £1m, £500k, and this month £1.1m, so we're running at 7 or 8 times this average. Whilst that is just a rough-and-ready calculation, I think that needs some explanation from RateSetter - were there significant one-offs? are we going to revert back to the mean with some PF cash uplifts in the near future? (but if so, why are the forecasts still implying a decline after 3 months of big falls?). Also looking at wiseclerk 's monthly stats, it seems the Zopa and RS figures for lending last month and last year are down as well. Thread link. I'm not sure but less money being lent would probably mean less money in the PF.
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r00lish67
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Post by r00lish67 on Mar 5, 2020 9:11:55 GMT
Also looking at wiseclerk's monthly stats, it seems the zopa and rs figures for lending last month and last year are down as well. I haven't paid quite as much attention to that, but did notice that "loans under management" in August 2019 was £891m and we now only have £862m, which ties in with that picture. I'd imagine that a reversing trend can't be ideal on a number of fronts - less revenue, less performant loans to service interest etc.
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PF
Mar 5, 2020 10:28:13 GMT
benaj likes this
Post by propman on Mar 5, 2020 10:28:13 GMT
Having (partially) missed the free exit boat at LW, I am loathe to make the same mistake. That PF is rapidly diminishing, and 7.1% is only 2-3% higher than I might get elsewhere for an instant access account (e.g. AC, LP). Very tempting to get out now... anyone want to argue me out of it? But Access is the nearest P2P equivalent of an instant access account!
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IFISAcava
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PF
Mar 5, 2020 10:34:55 GMT
via mobile
Post by IFISAcava on Mar 5, 2020 10:34:55 GMT
Having (partially) missed the free exit boat at LW, I am loathe to make the same mistake. That PF is rapidly diminishing, and 7.1% is only 2-3% higher than I might get elsewhere for an instant access account (e.g. AC, LP). Very tempting to get out now... anyone want to argue me out of it? But Access is the nearest P2P equivalent of an instant access account! Precisely - and at the 7.1% I have it is unbeatable. But the other instant access accounts - eg AC QAA - seem a bit more secure at the moment, and the Q is whether the extra 3% interest is worth it for now. Does anyone know, if there is a haircut at RS, is it published anywhere how they would do it? Do they just cut interest rates across the board, or is there some sort of lock in or haircut of capital if you exit early?
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benaj
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PF
Mar 5, 2020 10:36:06 GMT
Post by benaj on Mar 5, 2020 10:36:06 GMT
Having (partially) missed the free exit boat at LW, I am loathe to make the same mistake. That PF is rapidly diminishing, and 7.1% is only 2-3% higher than I might get elsewhere for an instant access account (e.g. AC, LP). Very tempting to get out now... anyone want to argue me out of it? But Access is the nearest P2P equivalent of an instant access account! So true, the Z Access was nothing like it. It was more like a cross over between FC 2016 x LW Flexible with Safeguard
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r00lish67
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Post by r00lish67 on Mar 5, 2020 10:42:54 GMT
But Access is the nearest P2P equivalent of an instant access account! Precisely - and at the 7.1% Ok have it is unbeatable. But the other instant access accounts - eg AC QAA - seem a bit more secure at the moment, and the Q is whether the extra 3% interest is worth it for now. Does anyone know, if there is a haircut at RS, is it published anywhere how they would do it? Do they just cut interest rates across the board, or is there some sort of lock in or haircut of capital if you exit early? Was checking this the other day, as I'm in exactly the same position ( majority of my RS money is in high-rate access). Best doc I've seen is hereKey bits: "If at any time, RateSetter reasonably believes that the Provision Fund does not have sufficient funds (including expected future inflows) to cover current or expected borrower defaults, RateSetter may implement a “Stabilisation Period”.
In this scenario RateSetter will implement an “Interest Reduction”. An Interest Reduction is a reduction (or ‘haircut’) to interest for all investors on all their existing investments (note, the reduction will not apply to future investments). This reduction is paid in full to the Provision Fund.
Should the Interest Reduction or Interest Reductions not be sufficient, RateSetter will implement a “Capital Reduction”, which like the Interest Reduction, would be a reduction to capital made to all investors on all of their existing investments. This reduction is paid in full to the Provision Fund"
As I think we'd all rather be comfortable staying invested than bailing, I would certainly appreciate some input on these concerns from RateSetter
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IFISAcava
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PF
Mar 5, 2020 10:51:32 GMT
Post by IFISAcava on Mar 5, 2020 10:51:32 GMT
Precisely - and at the 7.1% Ok have it is unbeatable. But the other instant access accounts - eg AC QAA - seem a bit more secure at the moment, and the Q is whether the extra 3% interest is worth it for now. Does anyone know, if there is a haircut at RS, is it published anywhere how they would do it? Do they just cut interest rates across the board, or is there some sort of lock in or haircut of capital if you exit early? Was checking this the other day, as I'm in exactly the same position ( majority of my RS money is in high-rate access). Best doc I've seen is hereKey bits: "If at any time, RateSetter reasonably believes that the Provision Fund does not have sufficient funds (including expected future inflows) to cover current or expected borrower defaults, RateSetter may implement a “Stabilisation Period”.
In this scenario RateSetter will implement an “Interest Reduction”. An Interest Reduction is a reduction (or ‘haircut’) to interest for all investors on all their existing investments (note, the reduction will not apply to future investments). This reduction is paid in full to the Provision Fund.
Should the Interest Reduction or Interest Reductions not be sufficient, RateSetter will implement a “Capital Reduction”, which like the Interest Reduction, would be a reduction to capital made to all investors on all of their existing investments. This reduction is paid in full to the Provision Fund"
As I think we'd all rather be comfortable staying invested than bailing, I would certainly appreciate some input on these concerns from RateSetter Indeed. The interest haircut on existing investments but not new ones is exactly what LW did. However, unless you do something (penalty exit fees) people just exit the old investments and buy new ones. Although perhaps that is where the Access money has an advantage over 1 year/5 year money - they may let Access money go (there is already a subsequent freeze on reinvesting) and top up PF from the longer term tied money. All of which might suggest ditching the 5 year money now for "only" a 1.5% ish fee and keeping the Access money instead. Decisions, decisions.
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