agent69
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Post by agent69 on May 26, 2015 21:45:48 GMT
I guess it cuts both ways.
Lenders often undercut each other trying to get their money lent out. Everyone wants to hold fast for a higher rate but once somebody accepts a lower rate, the masses can follow.
Flip side is that if you're a borrower in the queue at 5.9% you want to hold out, but if the lenders want 6.1% you have to watch out for somebody jumping ship and agreeing to pay 6.1%. That way you could end up paying 6.2% or 6.3%.
Personally I'm tucked in at 6.7% and expect a match before toooooooo long.
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Post by westonkevRS on May 27, 2015 5:18:33 GMT
A market needs both sides to tango, and the name RateSetters applied to both lenders and borrowers. Although really it's only the lender side that is active in setting a rate, borrowers typically always just took what was offered.
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oldgrumpy
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Post by oldgrumpy on May 27, 2015 8:03:33 GMT
I thought RS told borrowers the rate, not them telling RS what they wanted to pay
I thought both sides set the rate, each trying to get a good deal dependent on what is presented at the time. With the benefit of seeing the market fluctuations, lenders are in a better position to judge what that deal might be. Borrowers just see a snapshot at the time of their application and human nature being what it is, want just below what is offered and join all the other borrowers siting at 5.9. I reckon if they don't get a bite, patience will wear thin and they will either go elsewhere or take what lenders are offering, hence 6.2 being nibbled at. Anyway, I thought you'd gone floating this week... Yes ... I see what you mean .... RS can only offer what is actually available at a point in time. Borrowers can take it or fish for better, and I'm sure RS tell them the alternative to the prevailing rate. (edit: and although this morning's payment run was small, and there is no lender cash <6.1%, someone has managed a 5.9% match regardless at 09:01! and someone is advising the borrowers to chance their arm at offering 5.9% as that queue is filling up rapidly again - rather than any other borrower queue.) Lucky them if lenders take the frugal bait. Floating starts at 13:00 BST today ... had a slight delay ..... "unfortunately", but get two bites of MT's 4-cherries as a result. 10:17 edit: Blimey; money's hurtling out this morning. Some lucky person just got a match at 5.9% when there's no money available (on show) below 6.5%).
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trevor
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Post by trevor on May 27, 2015 13:15:59 GMT
A market needs both sides to tango, and the name RateSetters applied to both lenders and borrowers. Although really it's only the lender side that is active in setting a rate, borrowers typically always just took what was offered. I disagree with this comment. The borrower can place his loan at a lower rate than lenders are currently offering and see if a lender will match his asked for rate. I am keeping an eye on the 5 yr rate and there has been a lot of this type of matching occurring.
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spiral
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Post by spiral on May 27, 2015 13:38:11 GMT
I disagree with this comment. The borrower can place his loan at a lower rate than lenders are currently offering and see if a lender will match his asked for rate. But the opposite can (and usually does) occur, i.e. a lender can place their offer at or above what a borrower wishes to match at and see if it will match. In either scenario some match and some don't. This is what forms a market. If ALL borrowers chose to not match at above 5.9% in the 5 yr market the lender offers would very quickly, I suspect, match and make 5.9 the norm. Equally if no lender was prepared to lend below 7%, that would very quickly become the norm. The fact that rates fluctuate is because on both sides of the fence, there are people willing to accept different rates. I suspect that if you surveyed everyone (on both sides of the fence) that had a match today, most lenders would have been prepared to accept a little less and most borrowers prepared to pay a little more. The whole thing is a psychology game trying to eek out the last little bit to ones advantage.
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Post by closetotheedge on Jun 26, 2015 6:16:01 GMT
Now I really am confused. I sit silently taking 6.8% just watching and rarely having anything to say but this morning I log in to the 5 yr market and see this...
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spiral
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Post by spiral on Jun 26, 2015 8:36:56 GMT
Now I really am confused. I sit silently taking 6.8% just watching and rarely having anything to say but this morning I log in to the 5 yr market and see this... MR was set at 6.6 this morning (average of matches in last 24 hrs). Most of the 25K below this will be from people whose YR is set at rates ranging from 5.0 to 6.5 Until yesterday, they would have been placed on the market at 6.6 along with all the MR money but the new changes mean they go on market at exactly what they asked for.
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Post by beegee on Jun 26, 2015 8:55:29 GMT
These low YR rates will have an impact on tomorrows/Mondays? MR rate though. I know it is a weighted average but they are also causing money to be moved down the list to get matched quicker, all having an effect. New system will reduce MR.
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spiral
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Post by spiral on Jun 26, 2015 9:34:13 GMT
These low YR rates will have an impact on tomorrows/Mondays? MR rate though. I know it is a weighted average but they are also causing money to be moved down the list to get matched quicker, all having an effect. New system will reduce MR. This mornings low level funding was about 25K at a mean rate of 6.06. With MR at 6.6, it only requires 250K to go out at MR to maintain the status quo (weighted average of 6.55 which I assume feeds back as a MR of 6.6). The problem will come if/when people undercut the current MR. Using the figures above, each pound offered below MR will require an amount lent at MR equivalent to a weighted average of 6.55. I think the biggest risk to MR is on low matching days and I'm therefore unsure as to whether the 24 hour rule is the correct one for calculating MR. I'm siding more with the last £x of matches or that MR should remain unchanged on days when <£x has been matched.
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Post by p2plender on Jun 26, 2015 9:44:26 GMT
there's certainly a few benevolent lenders out there for sure....
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spiral
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Post by spiral on Jun 26, 2015 11:55:29 GMT
The problem will come if/when people undercut the current MR. Using the figures above, each pound offered below MR will require an amount lent at MR equivalent to a weighted average of 6.55. This is what's happening now. A further 20K below MR at a weighted average of 6.36 requires an additional 80K lent out at MR in order to keep MR at 6.6. The 2 snapshots I have seen indicate that at least 330K needs to go out at MR in order for MR to remain unchanged. Under normal circumstances, this would probably be achieved but on occassions where matching is low (or a large sum was placed on market at below MR), this will lead to a lowering of MR.
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Post by beegee on Jun 26, 2015 13:32:13 GMT
Daily repayments are normally quite a large amount and will mostly be placed at MR, causing quite a few lenders at the rear to leapfrog over to below MR. New money may also do this. Consequently MR will only move in one direction - downwards. This will continue until the rate become unattractive to lenders but will stay low. A few bursts though MR on high volume days will not be enough to raise the next days MR above the current days one.
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jonah
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Post by jonah on Jun 26, 2015 16:56:38 GMT
Daily repayments are normally quite a large amount and will mostly be placed at MR, causing quite a few lenders at the rear to leapfrog over to below MR. New money may also do this. Consequently MR will only move in one direction - downwards. This will continue until the rate become unattractive to lenders but will stay low. A few bursts though MR on high volume days will not be enough to raise the next days MR above the current days one. This is my concern too, although you have articulated it far better than I did!
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Post by westonkevRS on Jun 26, 2015 17:06:35 GMT
There is an awful lot of money sitting at 5.9% and above (on the 5 year market), forcing me to settle for 5.8% today rather than queueing my money that might take days to be accepted. There seems to be a lot of money there. I am wondering if people other than The Man In The Street is keeping rates below 6% to make RateSetter look unattractive. Just thought I'd quote the original post. Oh happy days....
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Post by westonkevRS on Jun 26, 2015 17:11:48 GMT
These low YR rates will have an impact on tomorrows/Mondays? MR rate though. I know it is a weighted average but they are also causing money to be moved down the list to get matched quicker, all having an effect. New system will reduce MR. This might be true, but only marginally. When your lending £2m a day across all the markets few rogue or generous lenders will have limited impact on the new actual loans matched system.... .... Imagine the screams of anguish if MR was still being set by orders, the MR would have been set perhaps a whole 1% lower than it was. So almost certainly ly so far the change to MR has been positive for lender returns and transparency. No more accusations if manipulation. We can't stop the madness or generosity of some of the crowd. @ westonkevRS
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