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Post by oppsididitagain on May 4, 2020 12:15:37 GMT
If you have been lending at 3%, the new rate is an annualised rate of 2% (not 1.5%) for 2020, but still not very attractive. Considering the BOE rate is now .10 % people are going to have to get used to lower rates everywhere. It could be worse, RS could start charging you a fee as well ! and as I have said before on another thread, the quickest way (at the moment) to get your money back is to hope a loan defaults and the PF pays out for you. The BoE rate doesn't drive retail lending. At a time of heightened fear about risk, and deleveraging, interest rates should going up, not down. This can be seen by the fact RS is unable to pay back even those in the account it marketed as "Access". The desire to lend and borrow are out of whack. You fix that by increasing the cost to borrow, or the reward for lending, not by further punishing those willing to lend. I agree, however RS has to find a balance between being attractive in the lending market to write new loans, and attractive for us to fund the platform. Thats how they make their money. I would hope people use the CBILS to pay off/reduce the exposures to P2P. - Its cheaper funding than a P2P platform. (I think they should be forced to move some of the debt to gov back loans. ) freeing up liquidity in the P2P markets I think, the major problem for ALL P2P platforms is they should have limited the amount you could withdraw at anyone time. A daily limit, or % of investment limit.- But this should have been set from years back, not on March 16. Yes some people will still be waiting in the queue, but more people will get something back. When you have 1 person asking for 250K from an access account that is going to put a huge strain on delivering cash, and the knock on effect sends shockwaves through the system. There might be a 100people in this situation (we don't know) . Would people put over 250K in an access account knowing it could take them. (example) 10 transactions to get a complete withdrawal ?? If P2P platforms are regulated by the FCA, then the FCA need to talk to the power that be and help us out like they do with funding for banks..
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sd2
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Post by sd2 on May 4, 2020 12:21:31 GMT
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. I’m not sure many investors will have invested with an expectation that a pandemic such as this would happen. And it’s the same lesson for those with hundreds of thousands. I just think a controlled return, making some funds available to all, regardless of the date they pressed the panic button, would be a fairer system. gg No I don't think that's right. As I think my £3000 is further up the queue than your 1,000,000.09p Although your suggestion is also pointless...I don't think there is any new lenders about. So where you are in the queue is irrelevant.
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sd2
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Post by sd2 on May 4, 2020 12:24:02 GMT
Also I need less money as the pubs are closed
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Post by diversifier on May 4, 2020 12:27:07 GMT
I get your point but I still think my proposal is the fair one. Access users have now lost far more, the key feature of their product 'Access' has gone and now they are stuck on 50% worse interest than they expected on a short term product which is now a long term one. Look we won't agree here, I get your argument, we will just have to agree to disagree. No, Access users have *not* lost far more. You haven’t fully analysed what 5-yr users have lost in practice.I had both, then I RYI’d Access a couple months ago, but kept 5yr (not reinvesting). To make a fair comparison, let’s say I RYI both today: I’m still stuck in both, for some number of months, because there’s a huge queue of sellers and only a few buyers. But likely not for the full underlying loan term. There are no truly new investors, but still a lot (currently 90%, and surely at least 50%) will continue to rollover. RYIs are funded by both loan terminations, and investor partial rollover. Let’s say my RYI takes 6 months on both. 1) Access: Receives a further 3%/2 = 1.5% interest for 6 months = +0.75% capital invested, no sellout fee, annualised to 1.5% 1a) Max: Receives a further 4%/2 = 2% interest for 6 months = 1%. Sellout fee loss of 90 days interest which is 0.5%. Total return is 0.5%, annualised to 1%. 2) Generic 5-yr investor: Receives 6%/2 = 3% interest for 6 months = +1.5% capital invested. Sellout fee 1.5% capital invested. Net is 0% interest! 3) My own 5-yr underlying loan terms happened to be about 10 months remaining. This was one of the reasons I *decided* (and that’s important) not to RYI two months ago. Call it 12 months to make the maths easier. Since I don’t sellout, I get all the repayments linearly over that time, consisting of capital and interest. The interest on average is based on half the capital today, plus instead of 6% it will only be 3%, =1.5% of capital. But I have to wait 12 months to receive all of that. Total is 1.5% at the end of the year. So, there certainly isn’t some massive discrimination against Access users. And also your return does depend on each person making a clear and measured calculation on what it means for them, which is as it should be.
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chris1200
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Post by chris1200 on May 4, 2020 12:30:45 GMT
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. I’m not sure many investors will have invested with an expectation that a pandemic such as this would happen. And it’s the same lesson for those with hundreds of thousands. I just think a controlled return, making some funds available to all, regardless of the date they pressed the panic button, would be a fairer system. gg It's not about predicting the specific cause (liquidity issues could have happened for countless reasons), it's that no one should have put money they might need to access quickly for vital reasons in an investment which could rapidly turn completely illiquid. It shows a complete misunderstanding of the product.
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coogaruk
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Post by coogaruk on May 4, 2020 12:55:44 GMT
Only money we will get back now is through repayments ,mine will go in to premium bonds and hope for good luck !!! I was having similar thoughts but decided to top up my SIPP (Not using ex-RS money I hasten to add) instead, for an 'instant' 25% uplift from the tax man
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gg
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Post by gg on May 4, 2020 13:42:36 GMT
I’m not sure many investors will have invested with an expectation that a pandemic such as this would happen. And it’s the same lesson for those with hundreds of thousands. I just think a controlled return, making some funds available to all, regardless of the date they pressed the panic button, would be a fairer system. gg It's not about predicting the specific cause (liquidity issues could have happened for countless reasons), it's that no one should have put money they might need to access quickly for vital reasons in an investment which could rapidly turn completely illiquid. It shows a complete misunderstanding of the product. People with a full time job (maybe two in the household) would have invested with an expectation to be able to get their money out within a few days (or even weeks at worst case). This was virtually unpredictable other than to the most seasoned investors. My view is that a fairer route to money, when there’s clearly a run on the platform, would be for each investor to receive their money back in a fairer way. The queue simply isn’t fair. Fortunately, I only have a few grand to get out having panicked when The Times did the attempted hatchet job on P2P back in January. gg
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chris1200
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Post by chris1200 on May 4, 2020 13:49:32 GMT
It's not about predicting the specific cause (liquidity issues could have happened for countless reasons), it's that no one should have put money they might need to access quickly for vital reasons in an investment which could rapidly turn completely illiquid. It shows a complete misunderstanding of the product. People with a full time job (maybe two in the household) would have invested with an expectation to be able to get their money out within a few days (or even weeks at worst case). This was virtually unpredictable other than to the most seasoned investors. My view is that a fairer route to money, when there’s clearly a run on the platform, would be for each investor to receive their money back in a fairer way. The queue simply isn’t fair. Fortunately, I only have a few grand to get out having panicked when The Times did the attempted hatchet job on P2P back in January. gg I don't know why it's relevant what job you have, no one should have invested in P2P with money that they might need "within a few days". It's not about predictability, it's about risk. People doing this clearly did not have the requisite understanding of P2P - or, perhaps, personal finance in general - to be investing (a consistent theme of this board). They shouldn't have been anywhere near P2P and need to take at least some responsibility for this. One assumes, for example, they didn't read any of the warnings plastered all over these websites or the T&C. That's really, really not good.
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chris1200
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Post by chris1200 on May 4, 2020 13:54:59 GMT
How long before RS make a capital reduction? They will then be unable to state "No one has ever lost money ......" All of these types of questions obviously depend hugely on much bigger questions about how the world deals with the pandemic, especially what happens as lockdowns are eased. So, currently, we have very little idea.
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jcb208
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Post by jcb208 on May 4, 2020 14:09:10 GMT
Not at all helpful now they have removed the Repayment date tab in my repayments by month page ,all you have now is by contract.Only reason to do this is to hide it from us
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spiral
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Post by spiral on May 4, 2020 15:26:59 GMT
Mmm, so they're making up their T&C's as they go along. That is not what they lead us to believe would happen previously. I always assumed that an event like this wouldn't be too catastrophic because it wouldn't affect new lenders therefore the river would keep flowing. Now it looks like it might dry up.
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chris1200
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Post by chris1200 on May 4, 2020 15:29:12 GMT
Mmm, so they're making up their T&C's as they go along. That is not what they lead us to believe would happen previously. I always assumed that an event like this wouldn't be too catastrophic because it wouldn't affect new lenders therefore the river would keep flowing. Now it looks like it might dry up.
The rules for new money are a forward-looking change, though. They're clear to investors at the time of investment, so you can choose not to invest if you don't like them. That's not particularly problematic (retrospective changes to existing investments are the issue, generally). RS are also allowing time for this all this to sink in by not allowing new investors for a while, so I think they're being pretty careful. There's been a lot thrown about regarding T&C on this forum recently, with perhaps not the most expert of understandings of how this all works legally.
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Post by df on May 4, 2020 16:11:39 GMT
Bad news, but I'm not too disappointed. My average was 6.1%. In the current market condition 3.05% is better than nothing. I still have some fixed rate bank accounts that pay between 2% and 3%, but I don't expect we'll see any new offers like this within next few years.
Trying to look at positive side of it. RS reduction of rate gives some reassurance that there is no expected loss of lenders' capital.
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Post by Ace on May 4, 2020 16:48:36 GMT
Bad news, but I'm not too disappointed. My average was 6.1%. In the current market condition 3.05% is better than nothing. I still have some fixed rate bank accounts that pay between 2% and 3%, but I don't expect we'll see any new offers like this within next few years. Trying to look at positive side of it. RS reduction of rate gives some reassurance that there is no expected loss of lenders' capital. I really don't see how this follows. Could have equally said that an ICR of 113% last month gives confidence that there is no expected risk of losses of interest.
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Post by diversifier on May 4, 2020 17:03:33 GMT
How long before RS make a capital reduction? They will then be unable to state "No one has ever lost money ......" I tried to estimate this with data. TLDR - on current default projections they *probably* won’t have to, but the remaining offer is rather un-inviting. Short term: The current run-rate on the PF so far due to excess defaults is ~£1.2m/month, = 0.14% of total capital, = 1.7% per year. (£8.25m cash in March reduced to £6.96m April, £5.84m on 4th May). Therefore, diverting roughly 1.5-2% of interest payments into the PF should keep it stable short term. OK. Medium-term: RS calculation based on new data shows expected future losses £39.2m, of which they have £28.9m PF expected previously. To return to 125% coverage, they need £49m PF, ie they are £20m short. Diverting 1.7% interest on £830m total assets, will generate £14m/yr additional inflow to the PF. Then it would take about 18 months to build the PF back to target. That doesn’t immediately cog with why RS claim that this measure will only last 8 months. To recover the PF in that short a time, RS also need to subsidise the PF by about £10m to “save the platform”. This is probably achievable partly from the expected sellout fees and excess interest headroom (6%+) from 5yr accounts, and partly from taking a haircut themselves on the RS intermediation fees. All that “headroom” between the 3-6% investor rates on the term accounts, to the 3% Access account, has been going into RS’s pocket. They can afford to give that profit up. Also, since they are making fewer new loans, their cost of acquiring new business (on both sides of the fence) will drop. Long-term: Partly depends on whether the RS modelling of default ratios is correct. This is more of a slow-burner, and with the new cash injections shouldn’t become an issue for at least the eight months. But the real question is whether the platform *has* a future beyond the length of the current set of 5-year loans. The only product they currently offer (Access) has an interest rate that doesn’t compensate for any risk, and has given up on matching interest rates between investors and borrowers. I suspect that RS will just pivot to become an online ”challenger” bank with completely classic model, FSCS cert’d, with the PF taking the role of its Basel2 required tier 1 capital.
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