r00lish67
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Post by r00lish67 on May 4, 2020 9:41:06 GMT
I'm not really clear as to why the going rate hasn't changed. It is covered in the FAQ, which says:
Q: Why haven't you changed the going rate for Access, Plus, Max?
A: Changes to the Going Rate do not change the level of resources in the Provision Fund. It is Interest Reductions that go to the Provision Fund.
Which seems a bit of a non sequitur to me. Does that make sense to anyone else? It seems very odd to me to have a GR displayed that is not actually the rate you'd get if you made a new investment.
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jlend
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Post by jlend on May 4, 2020 9:41:49 GMT
edit: Ref: fundamentals, 70% of their lending is to individuals. Many of whom are still on 80% pay with much reduced expenditure in the current climate. Most of the rest is property, which they've said they're still funding and so should be completed. Accept though that the calculations would all change if RS were to fail entirely. Covid appears to have had a positive effect on consumer debt with the largest reductions since BoE records began. www.p2pfinancenews.co.uk/2020/05/01/households-repaid-record-net-amount-of-consumer-credit-in-march/I have just paid off a loan and credit card balance for the younger of my two brothers who is not working. At times like this I think we should all keep any eye out for others that are less fortunate. I know one of my friends has done the same for his children who are not working
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johnt
Investing in Ratesetter, Zopa and Assetz Capital since 2013
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Post by johnt on May 4, 2020 9:45:30 GMT
Temporarily closing to new investors is not going to help the situation at all.
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chris1200
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Post by chris1200 on May 4, 2020 9:45:57 GMT
If this move helps to safeguard people’s capital then it’s a welcome move. RYI should be limited to 25% of your invested capital before you move to the back of the queue. Some people NEED their money to pay bills or buy food. Even a limit of £2,500 per month would seem reasonable to me. gg While I have some sympathy with the plight of smaller investors compared to huge ones clogging up the queue (after all, I am one), no one should ever have invested money they need for bills and food in something like this. It's sounds horrible, but this will hopefully be a salutary lesson for such people never to do something like that again.
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chris1200
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Post by chris1200 on May 4, 2020 9:48:11 GMT
I'm not really clear as to why the going rate hasn't changed. It is covered in the FAQ, which says: Q: Why haven't you changed the going rate for Access, Plus, Max? A: Changes to the Going Rate do not change the level of resources in the Provision Fund. It is Interest Reductions that go to the Provision Fund. Which seems a bit of a non sequitur to me. Does that make sense to anyone else? It seems very odd to me to have a GR displayed that is not actually the rate you'd get if you made a new investment. Read the same FAQ and had exactly the same reaction
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picnicman
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Post by picnicman on May 4, 2020 9:52:24 GMT
LW whilst protecting capital have stopped paying interest entirely - so whilst not good news from RS towers, it could be worse, but lets hope it does not go the same way in the coming months! Cheers P
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corto
Member of DD Central
one-syllabistic
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Post by corto on May 4, 2020 9:52:26 GMT
I'm not really clear as to why the going rate hasn't changed. It is covered in the FAQ, which says: Q: Why haven't you changed the going rate for Access, Plus, Max? A: Changes to the Going Rate do not change the level of resources in the Provision Fund. It is Interest Reductions that go to the Provision Fund. Which seems a bit of a non sequitur to me. Does that make sense to anyone else? It seems very odd to me to have a GR displayed that is not actually the rate you'd get if you made a new investment. Perhaps they consider the Going Rates nominal rates to return to when the current reductions in actually paid interest are over.
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pip
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Post by pip on May 4, 2020 9:54:35 GMT
Absolutely, reality is that many borrowers are now either unemployed, furlowed, business shut, trade 80% down and future totally uncertain. Repaying RS loans will probably be pretty low on the priority list when some income returns. Obviously not as bad for everybody and business but for many this is the situation. As I said on another thread I think I will get about 50% of my outstanding capital back. Making more in interest than capital losses, in my opinion very unlikely. Maybe I am being too pessimistic, but all things considering I think it's about right. On some platforms 50% may be too optimistic, especially if the platform itself starts to keel over, You really are being far too pessimistic in my view. To quote from the way RS have calculated their expected losses " we have also used economic forecasts from specialists Oxford Economics in our calculation of Expected Future Credit Losses, and in view of the economic uncertainty, we have chosen to apply full weighting to their downside economic case"Now, ok, we can all scoff about their credentials or independence, but it has to be said that RS have done this analysis and only chosen to halve investors interest at the moment. They could have stripped it entirely, or they could have called a capital event and struck out capital too. As it is, they currently believe they have 166% coverage on a capital basis. Bearing in mind they've currently chopped off circa 2% interest from people, things would have to be 24x as bad to reach your projection. Does that really sound realistic at this stage? Especially bearing in mind there is still a PF of which investors interest is being funnelled towards. edit. Re: fundamentals, 70% of their lending is to individuals. Many of whom are still on 80% pay with much reduced expenditure in the current climate. Most of the rest is property, which they've said they're still funding and so should be completed. Accept though that the calculations would all change if RS were to fail entirely. edit2: possibly some shoddy maths in my "24x" when I squint harder, but anyway the gist remains - it'd have to be a lot lot worse than it is at present. Yep I may well be being too pessimistic. Certainly as somebody else pointed out, for borrowers who have not seen their income impacted then their disposable income and ability to repay debt will have increased as their other outgoing have probably decreased a lot. Provisions on loan books are always fundamentally a finger in the air exercise. No point debating my 50% prediction, it's what I am expecting, if I get more I will be pleasantly surprised. If you expect less that is your prerogative, history will tell who is right. It will also almost certainly differ a lot person to person depending on the loan mix and platforms invested in. I also have taken into account the risk of some of the platforms which I have loans on collapsing and history has shown me that this seriously reduces recoveries. I personally think that expecting positive net interest vs defaults on P2P loans for the next loans is wildly optimistic, but I hope I am wrong.
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Post by Badly Drawn Stickman on May 4, 2020 9:59:42 GMT
Temporarily closing to new investors is not going to help the situation at all. Not sure there would have been much of a waiting list anyway currently. It does make sense to ensure that anybody new is fully aware that 3% is really only 2%, its tricky enough for those of us already through the door.
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pomma
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Post by pomma on May 4, 2020 10:00:22 GMT
I support the interest rate cut, especially if it means RS surviving this period which is difficult for everyone. I would rather lose interest for a few months than lose RS and my capital! I'm not pulling money out because I think that will only make the problem worse like the run on the banks during the last financial crisis. I hope my faith in RS and its investors will be justified!
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Post by shanghaiscouse on May 4, 2020 10:05:13 GMT
edit: Ref: fundamentals, 70% of their lending is to individuals. Many of whom are still on 80% pay with much reduced expenditure in the current climate. Most of the rest is property, which they've said they're still funding and so should be completed. Accept though that the calculations would all change if RS were to fail entirely. Covid appears to have had a positive effect on consumer debt with the largest reductions since BoE records began. www.p2pfinancenews.co.uk/2020/05/01/households-repaid-record-net-amount-of-consumer-credit-in-march/? yes, because spending has collapsed so debt is not being added to. not a great thing though.
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elliotn
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Post by elliotn on May 4, 2020 10:10:29 GMT
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Post by shanghaiscouse on May 4, 2020 10:15:18 GMT
I support the interest rate cut, especially if it means RS surviving this period which is difficult for everyone. I would rather lose interest for a few months than lose RS and my capital! I'm not pulling money out because I think that will only make the problem worse like the run on the banks during the last financial crisis. I hope my faith in RS and its investors will be justified! Well that's all very nice of you but my suggestion is you need to set yourself a hard limit to what you can tolerate, don't let things get worse and worse before you act as it will be too late. Remember, you have no government protection, and RS has in any case been losing £12-15m a year so its not like your money is with a sustainable business. Its fundamentally much more uncertain than a big bank and hence they should be paying way more than 1.5% to compensate for their added risk.
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Post by Badly Drawn Stickman on May 4, 2020 10:16:25 GMT
The silicon chip inside my head Gets switched to overload (wasted on many I suspect)
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Post by aroominyork on May 4, 2020 10:18:40 GMT
I have £5465 in the one year market at 5.4% due to mature in late July. The site shows £266.18 as "Interest less provision fund contribution". I don't recall seeing that when I last logged in pre-February. Is this new, that they are taking c.10% of interest for the PF?
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