One year rates vs five year rates (RS)

Just seen the 1yr trade at 9.5%, looks like its totally out of liquidity. 

I expect alot of withdrawals have been processed now.. 

See, I don't mind putting a little bit at a time* on the market at between 9% (4.5) and 10% (5).
Although I do feel a bit miffed that I only got 9% (4.5)

*because screw auto-diversification.

Only 6% if you assume the interest deduction stops at the end of the year, rather than say increases during 2020...

While I agree with all you say about the market (albeit when I first invested in RS I don't think the 1 year market was so biased towards commercial property) that feels that should influence you decision to invest in RS at all.  if/when it all goes wrong the 5 year market and the access market will share that loss with the one year market...

Well that’s where it might get very “interesting”.
You’re right that any capital haircut due to defaults should be mutualised across the markets to all loan-types. At first glance, I don’t care about the risks on specific loans. But it matters a lot exactly how it is calculated.

I don’t think they can legally haircut *outstanding capital*, as they don’t actually own it (it’s a direct contract between lender and borrower). The only thing they can do is garnish capital and interest repayments, and divert some to the PF. This would affect loans differently depending on term under “temporary special measures”.

Example case: say they decide to garnish the capital repayments by 10%, for a period of 6 months. 
   => 5-yr loans (capital repaid at 20%pa) lose 1% of capital
   => 2-yr loans (capital repaid at 50%pa) lose 2.5% of capital
   => 1-yr bullet loans (capital repaid in lump sum) half of them lose 10% capital (end of loan occurs within special measures period), half lose nothing at all.

And secondly, late last year RS changed Ts and Cs from “no discretion over the payout operation of the PF” to “RS has discretion over the payout operation of the PF”. I now have to factor in a risk that defaults *won’t* mutualise across the platform, and I might be fully liable on the individual risk.

Your overall comment that - if I’m sceptical about this, logically translates to not wanting to invest in RS at all - is correct. I’m now invested on purely a legacy basis: 5-yr, winding down in the last year of those loans. I sold off my Access when I realised how out-of-date I was on the implications of its Ts and Cs compared to Rolling. If the platform reverted to what I originally invested in (consumer loans, floating rate, high relative return, fixed loan term, well-stocked PF), then I’m interested again, but they aren’t offering that today.

I'm pretty sure it's all loans no matter the type. just because your loan doesn't repay interest now it will accrue it. however if in doubt perhaps call and ask?

Frankly I think many of you are living in a provision fund-induced fantasy.  You have been protected from the impact of the virus so far by (i) the RS provision fund, and (ii) the far bigger entire society level provision fund put in place by the government where money has been handed out for free in the forms of grants and furlough costs.  Once these things are taken away then many borrowers will collapse.  To imagine you are going to finally get 5% or 9% of whatever is a fantasy.  RS should have cut the interest way earlier (in the same way the govt stopped all the big banks paying out divis) and the small haircut they have done is nowhere near enough.  Its just the cushions are deflating slowly.