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Post by Ace on May 4, 2020 16:03:33 GMT
I've just received an email from Loanpad announcing a 0.5% reduction in rates for all of their accounts. It's a shame, but I think they are still good value. I'll be keeping my investment level with them at the current level, but probably won't increase it now. I still feel them to be the safest platform of all the ones I've looked at.
They've also introduced a new updates tab, which is a very welcome addition.
EDIT: Thread tittle updated from "Rate reductions" to "Rate changes" to better reflect the use of the thread.
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Post by Badly Drawn Stickman on May 4, 2020 16:21:31 GMT
I've just received an email from Loanpad announcing a 0.5% reduction in rates for all of their accounts. It's a shame, but I think they are still good value. I'll be keeping my investment level with them at the current level, but probably won't increase it now. I still feel them to be the safest platform of all the ones I've looked at. They've also introduced a new updates tab, which is a very welcome addition. Not sure announcing is the way I would describe it, 'sneakin it in' at the end of the email seems a touch shifty. It should have been the headline comment, I suspect many will not read emails that closely and not notice for a while. At 0,5% a tab thank God there was only one. Edit, not just a criticism of Loanpad. A lot of financial institutions are doing the same, offering up as some sort of blessing after a page of waffle.
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Post by Ace on May 4, 2020 16:33:45 GMT
I've just received an email from Loanpad announcing a 0.5% reduction in rates for all of their accounts. It's a shame, but I think they are still good value. I'll be keeping my investment level with them at the current level, but probably won't increase it now. I still feel them to be the safest platform of all the ones I've looked at. They've also introduced a new updates tab, which is a very welcome addition. Not sure announcing is the way I would describe it, 'sneakin it in' at the end of the email seems a touch shifty. It should have been the headline comment, I suspect many will not read emails that closely and not notice for a while. At 0,5% a tab thank God there was only one. Edit, not just a criticism of Loanpad. A lot of financial institutions are doing the same, offering up as some sort of blessing after a page of waffle. I agree, but it was obvious what was coming right from the first couple of paragraphs. It did seem like the rest of the waffle was to soften us up for it.
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Post by Badly Drawn Stickman on May 4, 2020 16:46:31 GMT
Not sure announcing is the way I would describe it, 'sneakin it in' at the end of the email seems a touch shifty. It should have been the headline comment, I suspect many will not read emails that closely and not notice for a while. At 0,5% a tab thank God there was only one. Edit, not just a criticism of Loanpad. A lot of financial institutions are doing the same, offering up as some sort of blessing after a page of waffle. I agree, but it was obvious what was coming right from the first couple of paragraphs. It did seem like the rest of the waffle was to soften us up for it. I do also feel in Loanpad's case a period of notice could have been given, they are not in the same level of trouble as some of the others. So effectively backdating it to the start of today (I reset some withdrawals after the midday payment run) is pretty poor form. Disappointed with them to an extent. You are quite right however the ending of the story was clearly coming.
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littleoldlady
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Post by littleoldlady on May 4, 2020 17:12:00 GMT
Disappointing yes but understandable. IMO LP is the platform most likely to survive, due to its unique (AFAIK) model of the "opposite of mezzanine loans" (basement loans?) meaning ultra low LTVs. However when interest rates reach <4% many people will say that the difference to FSCS accounts is too small to take any degree of risk whatsoever.
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rocky1
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Post by rocky1 on May 4, 2020 17:59:15 GMT
is this a temporary rate reduction due to the current situation?was not expecting loanpad to see this as an opportunity and jump on the bandwagon of rate cutting which some p2p platforms now have to do along with other desperate measures to survive.cant see any justification for loanpad to cut their already average rates for the risks unless there is something that we are not being told going on.
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mrdc
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Post by mrdc on May 4, 2020 18:33:33 GMT
is this a temporary rate reduction due to the current situation?was not expecting loanpad to see this as an opportunity and jump on the bandwagon of rate cutting which some p2p platforms now have to do along with other desperate measures to survive.cant see any justification for loanpad to cut their already average rates for the risks unless there is something that we are not being told going on. The email said "Our rates and our lending partners’ rates will continue to be monitored in light of general market conditions and inflation expectations. " , so probably not temporary. I'm sort of ok with the 0.5 reduction, but based on other platforms recently the first change leads to a second then a third etc etc etc. I hope Loanpads changes don't snowball like this. Investor numbers had been climbing well over the last few days but this could change now. They have got low LTV so will still keep my holding with them at the moment.
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Post by nooneere on May 4, 2020 18:33:59 GMT
Disappointing yes but understandable. IMO LP is the platform most likely to survive, due to its unique (AFAIK) model of the "opposite of mezzanine loans" (basement loans?) meaning ultra low LTVs. However when interest rates reach <4% many people will say that the difference to FSCS accounts is too small to take any degree of risk whatsoever. I'd say <2% is the point where I would start thinking about the FSCS comparison. My own bank is offering 0.01% on its savings account - that's 10 pence per £1000. There is a recent blog from the fixed interest asset manager TwentyFour that says "cash will not be a viable asset class going forward" - twentyfouram.com/2020/04/27/investors-could-face-another-decade-of-income-scarcity/
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withnell
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Post by withnell on May 5, 2020 5:40:35 GMT
I'd have thought a more fair way would be to give 60 days notice so that anyone in Premium could make a choice to exit (not saying there would be liquidity though!).
I understand the logic, but the facts appear to point to future lending rather than existing - we are reassured the lending partner is in good shape, so why do they need a rate cut now?
Why not give some notice of the intention, maybe allow lender input/discussion? I'm normally a massive fan of Loanpad but this change seems a bit sneaky
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littleoldlady
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Post by littleoldlady on May 5, 2020 8:04:12 GMT
Disappointing yes but understandable. IMO LP is the platform most likely to survive, due to its unique (AFAIK) model of the "opposite of mezzanine loans" (basement loans?) meaning ultra low LTVs. However when interest rates reach <4% many people will say that the difference to FSCS accounts is too small to take any degree of risk whatsoever. I'd say <2% is the point where I would start thinking about the FSCS comparison. My own bank is offering 0.01% on its savings account - that's 10 pence per £1000. There is a recent blog from the fixed interest asset manager TwentyFour that says "cash will not be a viable asset class going forward" - twentyfouram.com/2020/04/27/investors-could-face-another-decade-of-income-scarcity/I agree that FSCS backed interest of any positive amount is going to be scarce for years to come. However the problem with risky investments, no matter how low the risk, that pay a low rate is that it takes an awful long time for accumulated interest to act as a buffer against defaults. At 3.5% pa it takes 3 years without a default to reach a point where you can tolerate a 10% default. In the post virus world I expect defaults to become commonplace, and even a platform as solid as LP will not be totally immune. Taken in aggregate, we are going to be poorer for a long time. There is no escaping that unpleasant truth. The longer the lockdown goes on, or a second wave of the virus if the lockdown is ended prematurely, the poorer we shall be. The days of accumulating wealth are over for most of us for the foreseeable future and capital protection, at least in nominal terms, will be paramount. Just my opinion. Time will tell who is right.
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Post by Badly Drawn Stickman on May 5, 2020 8:44:48 GMT
I agree that FSCS backed interest of any positive amount is going to be scarce for years to come. However the problem with risky investments, no matter how low the risk, that pay a low rate is that it takes an awful long time for accumulated interest to act as a buffer against defaults. At 3.5% pa it takes 3 years without a default to reach a point where you can tolerate a 10% default. In the post virus world I expect defaults to become commonplace, and even a platform as solid as LP will not be totally immune. Taken in aggregate, we are going to be poorer for a long time. There is no escaping that unpleasant truth. The longer the lockdown goes on, or a second wave of the virus if the lockdown is ended prematurely, the poorer we shall be. The days of accumulating wealth are over for most of us for the foreseeable future and capital protection, at least in nominal terms, will be paramount. Just my opinion. Time will tell who is right. I would agree with most of that, the risk benefits have to be viable and protecting capital has to be the driving factor currently. Loanpad seems on first sight too be relatively safe but for me has always had an underlying weakness in that it is solely dependent on one partner. My own view is that I have had a profitable spell with them, and am happy to let that profit rest with them. The underlying capital however will be slowly heading into the bunker for the time being. I have a feeling the rates will drop further in the near future, if only due to lack of competition. At that point liquidity may be less apparent.
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Ukmikk
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Post by Ukmikk on May 5, 2020 10:50:14 GMT
It's possible the reason for rate cuts is to slow down the influx of lender funds.
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morris
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Post by morris on May 5, 2020 11:36:25 GMT
I agree that FSCS backed interest of any positive amount is going to be scarce for years to come. However the problem with risky investments, no matter how low the risk, that pay a low rate is that it takes an awful long time for accumulated interest to act as a buffer against defaults. At 3.5% pa it takes 3 years without a default to reach a point where you can tolerate a 10% default. In the post virus world I expect defaults to become commonplace, and even a platform as solid as LP will not be totally immune. Taken in aggregate, we are going to be poorer for a long time. There is no escaping that unpleasant truth. The longer the lockdown goes on, or a second wave of the virus if the lockdown is ended prematurely, the poorer we shall be. The days of accumulating wealth are over for most of us for the foreseeable future and capital protection, at least in nominal terms, will be paramount. Just my opinion. Time will tell who is right.
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morris
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Post by morris on May 5, 2020 11:42:39 GMT
I am not expecting to accumulate much wealth by investing in p2p. In fact I would be happy to keep it under the bed if it wasn't depreciated by the ravages of inflation. And I expect inflation to increase in the future as Governments seek to depreciate the value of the money they have had to borrow.
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Post by Ace on May 5, 2020 11:47:11 GMT
It looks like Loanpad are genuinely finding it difficult to achieve the same rates that they used to. They've added new tranches to two loans today totalling £200k at rates (to Loanpad) that are 0.75% below previous tranches in the same loans.
Of the £750k that was repaid today, only the above £200k has been relent. This leaves £912k unlent, much higher than normal. Whether that's a deliberate retention of cash to satisfy expected withdrawal requests following yesterday's rate decrease, or difficulty in finding new opportunities is anyone's guess.
Perhaps the reduction in rates will allow them to find additional lending partners. That would be good news if it happened.
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