Stonk
Stonking
Posts: 735
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Post by Stonk on Mar 14, 2020 15:35:21 GMT
Unfair to suggest RS are throttling or delaying access to money. They went on the record after 2017 summer sellout to say they lost 5% of their customers. On around £850m of loans that’s over £40m of sellout requests. There’s only about £1m on the markets, even if they cleared out the markets you’ve still got a huge backlog. Unless there’s a flood of new investor money you simply need to wait for loans to repay. Good buying opportunity if anything, rates went up to 7% or 8% last time and all money was returned within 30 days as promised. Think RateSetter deserve some credit and some slack.
I accept this. RYIs are being throttled by the lack of lender funds, not by a deliberate action by RS. I agree it is something RS have no choice about. They could use the small amount of lender money on the market to meet a few RYIs, but presumably a choice has been made to keep a bit of a market going.
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Post by cinereus on Mar 14, 2020 18:27:53 GMT
Unfair to suggest RS are throttling or delaying access to money. Why. It seems clear they definitely are. They are using some formula but we are not exactly sure what it is, to what extent they are throttling or whether that will change.
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dorset
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Post by dorset on Mar 14, 2020 19:09:37 GMT
Just looked at the lender queue which is almost non-existent.
Two weeks ago I decided to sell out my RS holdings completely. Request in the morning, money in my holding account by the afternoon. That is the extent of the deterioration to today.
It’s known as a liquidity run. The longer it gets the more people try to sell out and the less people put in.
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scc
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Post by scc on Mar 14, 2020 20:23:52 GMT
Just looked at the lender queue which is almost non-existent. Two weeks ago I decided to sell out my RS holdings completely. Request in the morning, money in my holding account by the afternoon. That is the extent of the deterioration to today. It’s known as a liquidity run. The longer it gets the more people try to sell out and the less people put in. Same here, dorset. I got everything out bar about £150 of under a tenner loans without any problems.
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Post by jaycee on Mar 14, 2020 20:42:51 GMT
Unfair to suggest RS are throttling or delaying access to money. They went on the record after 2017 summer sellout to say they lost 5% of their customers. On around £850m of loans that’s over £40m of sellout requests. There’s only about £1m on the markets, even if they cleared out the markets you’ve still got a huge backlog. Unless there’s a flood of new investor money you simply need to wait for loans to repay. Good buying opportunity if anything, rates went up to 7% or 8% last time and all money was returned within 30 days as promised. Think RateSetter deserve some credit and some slack.
I accept this. RYIs are being throttled by the lack of lender funds, not by a deliberate action by RS. I agree it is something RS have no choice about. They could use the small amount of lender money on the market to meet a few RYIs, but presumably a choice has been made to keep a bit of a market going.
They could increase the "going rate" to attract more lenders. The assumption that the lender queue is a fixed quantity and that there's no money sitting on the sidelines that could be enticed by a higher "going rate" at a time when bank interest is falling, isn't realistic.
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Post by davee39 on Mar 14, 2020 21:28:43 GMT
There has just been a base rate cut. Banks are once again getting unlimited funds at 0.25% interest, which will show up in remarkably low rates for personal loans. How on earth could RS find borrowers if they increased rates. Investment release is a benefit, not a guarantee. Just sit back and wait.
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Post by tom1 on Mar 14, 2020 22:52:55 GMT
There has just been a base rate cut. Banks are once again getting unlimited funds at 0.25% interest, which will show up in remarkably low rates for personal loans. How on earth could RS find borrowers if they increased rates. Investment release is a benefit, not a guarantee. Just sit back and wait. I agree that RS cannot necessarily magic up borrowers in the current lending market. I disagree with your second premise though - Investment Release used to be unnecessary for the Rolling Market and was only really required for money in there once they started trapping the capital from rolling loans into longer loans. You used to get your full capital back every month and have a choice about whether it was reinvested.
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Post by tom1 on Mar 14, 2020 23:08:04 GMT
So if the RYI queue substantially increases, the viability of the whole project starts to be called into question?
I wouldn't go that far. The viability of always-available near-instant-access is in question, but that aspect has never been guaranteed (although many have assumed it).
If RS were to say, right now, that there can be no more RYI-ing (ever), and all requests in the queue are cancelled, then the platform could continue in principle much the same as before. Expectations of rates would change, though.
I think they have been getting away with quite a lot in not allowing lenders to limit the length of loan for which their money might be locked in. I think if they also removed the ability to request your money before the end of the matched loan that would really push the boundaries of what people should be accepting! I agree, expectations would change in those circumstances. They would also have to collapse all the markets into one because you could no longer trigger the difference penalties for Access, Plus, and Max.
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Post by cinereus on Mar 15, 2020 1:28:20 GMT
It’s known as a liquidity run. The longer it gets the more people try to sell out and the less people put in. Precisely. If it gets much worse than present the throttling will be counter-productive.
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spiral
Member of DD Central
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Post by spiral on Mar 16, 2020 7:35:52 GMT
Investment Release used to be unnecessary for the Rolling Market and was only really required for money in there once they started trapping the capital from rolling loans into longer loans. You used to get your full capital back every month and have a choice about whether it was reinvested.
That was only ever an illusion created by the non existence of an event like now. In reality, the money you had repaid to your account was never actually repaid, it was still on loan to a borrower. The smoke and mirrors effect only worked because 99% of people reinvested.
If that system existed today, you’d find that money you thought you had in holding still couldn’t be withdrawn immediately but you’d be even more miffed because it appeared as though it was available.
That is the reason behind the change RS made. They are now open about the fact that you have to sell out and need a buyer whereas before everyone thought the money became available every month.
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Post by throwaway2501 on Mar 16, 2020 9:12:08 GMT
Just wondering if people have had any Releases of Access loans go through yet? There were quite a few people saying that they made the Release requests early last week so intrigued as to whether there has yet been any progress.
I’m still puzzling over what the RateSetter guidance of it likely being “more than a week” means...
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benaj
Member of DD Central
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Post by benaj on Mar 16, 2020 9:19:08 GMT
Just wondering if people have had any Releases of Access loans go through yet? There were quite a few people saying that they made the Release requests early last week so intrigued as to whether there has yet been any progress. I’m still puzzling over what the RateSetter guidance of it likely being “more than a week” means... No panic yet, the longest I waited for RYI is 2 weeks back in 2019.
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Post by cinereus on Mar 16, 2020 11:34:21 GMT
These are clearly extraordinary times with the coronavirus outbreak now affecting every walk of life and, as a valued customer of RateSetter, we wanted to communicate to let you know how we are responding.
As a responsible employer, we have already changed our working patterns and deployed our business continuity planning to keep things moving as normal. Normal means continuing to deliver stable returns to our investors and credit to borrowers – stable investments and the supply of credit can play an even more important role in these times.
We have seen volatility in shares and interest rates cut – our response is that RateSetter is uncorrelated to the stock market and we have kept our investor rates unchanged, allowing you to avoid volatility and keep your money moving forward. We are an investment, not a savings product, and that means capital is at risk and access not guaranteed – our response in these times is keeping access open with the minimum delay and managing our Provision Fund and credit performance, as we have done for nearly 10 years. We have reduced lending to prioritise access.
This outbreak also coincides with the upcoming ISA deadline, the busiest time of year for investing on RateSetter. We remain focussed on servicing this ISA demand at this time as we are sure that, even now, many investors will be making the most of their tax-free allowance either side of 5 April.
Thank you for being a RateSetter investor and for your ongoing support. We will be posting updates, as we always do, on the RateSetter Noticeboard which is available in your account and our customer service team is available as normal for any questions you may have.
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Post by cinereus on Mar 16, 2020 11:35:07 GMT
It may be somewhat "uncorrelated" to the stock markets but it's obviously not completely independent and untethered.
This seems all a bit ostrich to me.
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Stonk
Stonking
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Post by Stonk on Mar 16, 2020 13:02:56 GMT
Indeed. RS may or may not be uncorrelated to share prices, but they are certainly affected by personal and business finances. Which, if this outbreak goes unchecked, are going to take a hit like never in living memory. I hope the Government knows what it is doing, because I certainly do not.
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