p2pfan
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Post by p2pfan on Aug 12, 2020 15:21:10 GMT
Assetz Capital:
"For the time being, we are changing the published target rates on our Access Accounts as follows:
- QAA - 3.75%
- 30DAA - 4.00%
- 90DAA - 4.10%
"
I'm curious as to why there will be hardly any difference that will be paid on the 90DAA versus the 30DAA or QAA?
Surely AC want stability in this tumultuous times and part of that is having a guarantee that they will have a certain amount of money for at least three months?
It doesn’t make any sense for us to have our money trapped for at the very least 90 days (and probably much longer, unless sell at a hefty discount) when the return is not meaningfully higher than those accounts with (hypothetically) much quicker access.
Do you think this is a temporary measure and the 90DAA returns could increase soon? I'm trying to decide which account to invest into.
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dead-money
Rocket to the Moon
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Post by dead-money on Aug 12, 2020 15:29:27 GMT
Sadly Crystal ball is very cloudy today.
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jlend
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Post by jlend on Aug 12, 2020 15:36:14 GMT
As per the original terms the minimum target rate of the QAA can't fall below 3.75%, the minimum target rate of the 30DAA can't fall below 4%. Of course you could get less than the target rate if there was insufficient money in the PF and borrower interest payments were insufficient. So AC set the target rates as low as they could on the QAA and 30DAA.
There was never a minimum target rate on the 90DAA. AC have set the 90DAA target rate just above the 30DAA rate.
Setting the 90DAA rate any higher would risk the 90DAA running out of unallocated cash. At the end of June there was only 20k unallocated cash left in the 90DAA PF so it dropped very low. Of course the PF may be in a better position now.
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p2pfan
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Post by p2pfan on Aug 12, 2020 18:56:49 GMT
Setting the 90DAA rate any higher would risk the 90DAA running out of unallocated cash. At the end of June there was only 20k unallocated cash left in the 90DAA PF so it dropped very low. Of course the PF may be in a better position now. Thank you for your helpful reply. Please could you explain this bit? Wouldn't they have more cash to lend out? I thought borrowers were desperate for money. I was of the thinking that having a higher rate for the 90DAA would be beneficial all round: AC and their borrowers have a pot of money that can't be withdrawn for at least three months (and, as matters currently stand, for much longer than that) and lenders get a higher interest rate? By make the 90DAA rate only negligibly 0.1% higher than the 30DAA and also only slightly higher than the QAA aren't they making the 90DAA hugely less attractive?
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dead-money
Rocket to the Moon
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Post by dead-money on Aug 12, 2020 19:16:49 GMT
Setting the 90DAA rate any higher would risk the 90DAA running out of unallocated cash. At the end of June there was only 20k unallocated cash left in the 90DAA PF so it dropped very low. Of course the PF may be in a better position now. Thank you for your helpful reply. Please could you explain this bit? Wouldn't they have more cash to lend out? I thought borrowers were desperate for money. I was of the thinking that having a higher rate for the 90DAA would be beneficial all round: AC and their borrowers have a pot of money that can't be withdrawn for at least three months (and, as matters currently stand, for much longer than that) and lenders get a higher interest rate? By make the 90DAA rate only negligibly 0.1% higher than the 30DAA and also only slightly higher than the QAA aren't they making the 90DAA hugely less attractive?
Borrowers can obtain lending at historically low rates, both through govt. backed schemes and other commercial lending. The costs to a borrower of a P2P loan after entry / exit fees, monitoring fees etc. are added in needs to be competitive.
If AC pays you 4.1%, after overheads, Provison fund and other costs they might be lending out at 9.9%. A borrower can now replace that with a Govt. backed loan at 6% or less.
Whilst AC needs to continue to fund future tranches of existing loans on current terms, any new loan issuance will likely be at lower interest rates for the borrower and as a consequence to you the lender.
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