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Post by diversifier on Sept 20, 2020 12:11:09 GMT
There is no guarantee that the “clever rate trick” will continue to be supported. When that is stopped, it is simple forced reinvestment indefinitely, independent of the length of the underlying loans. For example, Metro can recalculate that the Interest Coverage Ratio is no longer sufficient to protect Interest, and therefore Capital only will be protected. Then, interest rate will be set to zero. Since zero multiplied by anything is still zero, all loans will then be equally reinvested irrespective of their “set” value. There are two other ways to do it too. As the level of voluntary reinvestment decreases over the next months, Metro will be forced to implement this or something very like it. Metro have a level of “lending commitments” for property development that they have simply no normal means to ensure that reinvestment will cover. They have explicitly stated they won’t do that lending themselves. *So, yes you will be forced to reinvest, unless you expect Metro to renege on contracts to property developers*. You can shout that it’s not legal if you like, but that is what will happen and individuals will have to decide what action to take at that time. The great unknown is the exact size of that “committed lending”. First signs are that it is not as large as feared. The weekly RYI level has shot up from £2.2m to about £3.7m. Metro do have every interest to cease everything not absolutely committed. They don’t *want* to get involved in battles not of their making. But that was a single step change, and overall reinvestment will decrease again from here by an average of £0.12m per week, as before. The Metro acquisition bought us about 3 months by taking on the consumer lending. At some point the RYI still hits zero - current estimate 30 weeks from now. The level of committed re-lending will also reduce over time, as developments complete. It’s a race between those two factors. But once the RYI hits zero, and it surely will, Metro simply have no room to maneuver. It’s also important to understand that the continued reduction in reinvestment rate is not a “negative view”, or an idea that “investors are losing confidence”. People who invested in APM never intended for it to be a lifelong investment. Typically, they invest for a year or two, then they move the money elsewhere. So it’s entirely normal that after six months, 25-40% have wanted their money back, which is the current measured value. We can expect that in the next six months, another 25-40% will want their money back and attempt to switch reinvestment off. It is not a 'clever trick' the T&Cs say you can re-invest at rates up to 5% above the 'going rate', so if RS set the 'going rate' to zero you would still be able to put your rate at 5%. If it was lent at that, but you got 0% due to an interest haircut, at least the 5% would have to go into the PF. I do not think RS can force you to reinvest, if you inform RS that you want to close your account you would have to wait for your loans to repay (if RYI was impossible) but I can't see how they could legally re-invest any of your returning funds. I'm sure there are ways Metro could help RS out If the lack of funds became dire, in theory at least any funds they had to put in would come back to them with interest. I won’t argue semantics as to whether it’s a trick or not. But the fact remains that there is a simple TandC compliant way for Metro to ensure that people still get their money reinvested on an equal basis, against their will, when it is necessary for Ratesetter. Setting your rate to +5% would indeed divert the interest repayments from Ratesetter to the PF. The trivial answer is for Ratesetter to set the “going rate” to BoE base rate, currently 0.1%, but BoE are making preparations for it to go down to -0.5% to match Eurozone. Hence, 4.5% net is what would go to PF, very similar to current 4.3%. Once again, the semantics may make you happy, but the actual figures are basically unaffected. Like I said, there’s loads of ways to implement this. Sorry, there’s nowhere in the TandC that promises not to reinvest once you have requested to close the account. *If they need to*, they will reinvest your money on an equal basis as everyone else, until successful RYI. If they don’t need it, they won’t antagonise investors that way. Of course Metro *could* help out. They will do so exactly as long as it doesn’t put their own money at risk. When it does, they won’t.
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Sept 20, 2020 12:50:23 GMT
It is not a 'clever trick' the T&Cs say you can re-invest at rates up to 5% above the 'going rate', so if RS set the 'going rate' to zero you would still be able to put your rate at 5%. If it was lent at that, but you got 0% due to an interest haircut, at least the 5% would have to go into the PF. I do not think RS can force you to reinvest, if you inform RS that you want to close your account you would have to wait for your loans to repay (if RYI was impossible) but I can't see how they could legally re-invest any of your returning funds. I'm sure there are ways Metro could help RS out If the lack of funds became dire, in theory at least any funds they had to put in would come back to them with interest. I won’t argue semantics as to whether it’s a trick or not. But the fact remains that there is a simple TandC compliant way for Metro to ensure that people still get their money reinvested on an equal basis, against their will, when it is necessary for Ratesetter. Setting your rate to +5% would indeed divert the interest repayments from Ratesetter to the PF. The trivial answer is for Ratesetter to set the “going rate” to BoE base rate, currently 0.1%, but BoE are making preparations for it to go down to -0.5% to match Eurozone. Hence, 4.5% net is what would go to PF, very similar to current 4.3%. Once again, the semantics may make you happy, but the actual figures are basically unaffected. Like I said, there’s loads of ways to implement this. Sorry, there’s nowhere in the TandC that promises not to reinvest once you have requested to close the account. *If they need to*, they will reinvest your money on an equal basis as everyone else, until successful RYI. If they don’t need it, they won’t antagonise investors that way. Of course Metro *could* help out. They will do so exactly as long as it doesn’t put their own money at risk. When it does, they won’t. I don't see how that could be legal, if you had requested them to close your account and specifically requested all returned funds to be paid to you, it is your money once it's returned from borrowers, the RYI is a method of accessing your money early not at end of term, at end of term it's your money. I think the FCA and the financial ombudsman would take a very dim view of that.
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Post by danny101 on Sept 20, 2020 13:18:12 GMT
On that basis, what if everybody in the RYI queue asked to close there accounts would RS just then stop there re- investments, I think not, ratesetter aren't stupid.
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Greenwood2
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Post by Greenwood2 on Sept 20, 2020 13:21:46 GMT
On that basis, what if everybody in the RYI queue asked to close there accounts would RS just then stop there re- investments, I think not, ratesetter aren't stupid. Anyone on here and reading this will have already stopped reinvesting using the 'neat trick' (or the set your own 'high' rate feature) above.
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Post by Badly Drawn Stickman on Sept 20, 2020 14:01:06 GMT
I have always found it quite easy to solve a problem that doesn't exist.
Presumably RS are happily doing any 'obligated' lending and still managing to return a fair amount in RYI currently. I am struggling to see anything that will alter that. Whatever element of the lender base that is currently financing this is showing no signs of altering its behaviour, either by ignorance or design some are content to keep reinvesting/investing unless that changes drastically nothing much will change.
A sudden dramatic halt to the current RYI returns would signal the time for real concern. Unless of course all the fuss being made wakes the sleeping beast currently letting us sneak out.
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Post by diversifier on Sept 20, 2020 14:07:24 GMT
I won’t argue semantics as to whether it’s a trick or not. But the fact remains that there is a simple TandC compliant way for Metro to ensure that people still get their money reinvested on an equal basis, against their will, when it is necessary for Ratesetter. Setting your rate to +5% would indeed divert the interest repayments from Ratesetter to the PF. The trivial answer is for Ratesetter to set the “going rate” to BoE base rate, currently 0.1%, but BoE are making preparations for it to go down to -0.5% to match Eurozone. Hence, 4.5% net is what would go to PF, very similar to current 4.3%. Once again, the semantics may make you happy, but the actual figures are basically unaffected. Like I said, there’s loads of ways to implement this. Sorry, there’s nowhere in the TandC that promises not to reinvest once you have requested to close the account. *If they need to*, they will reinvest your money on an equal basis as everyone else, until successful RYI. If they don’t need it, they won’t antagonise investors that way. Of course Metro *could* help out. They will do so exactly as long as it doesn’t put their own money at risk. When it does, they won’t. I don't see how that could be legal, if you had requested them to close your account and specifically requested all returned funds to be paid to you, it is your money once it's returned from borrowers, the RYI is a method of accessing your money early not at end of term, at end of term it's your money. I think the FCA and the financial ombudsman would take a very dim view of that. I am not a lawyer . I’m not even sure how you could verify that they were “illegally” reinvesting money at the end of term. In practice, these will be follow-on loans on existing property developments. Ratesetter could simply restructure deals, changing to loan *extension* with a midway staging payment to replace the balloon payment interest. We have neither control nor visibility. Do you track the maturity of all your existing loans and see whether they repay when they ought to, or are loan extensions offered even in normal times? I certainly didn’t. I’m not saying this is how it *would* be done. I’m saying that we are dealing with financially sophisticated entities, paying city lawyers and accountants £500/hr in their own interests. Whereas we have no visibility of the Ts and Cs of underlying contracts, and view the playing field through the medium of a piece of wet string. You can’t really think you are going to come out ahead on that, do you?
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Greenwood2
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Post by Greenwood2 on Sept 20, 2020 15:06:41 GMT
I don't see how that could be legal, if you had requested them to close your account and specifically requested all returned funds to be paid to you, it is your money once it's returned from borrowers, the RYI is a method of accessing your money early not at end of term, at end of term it's your money. I think the FCA and the financial ombudsman would take a very dim view of that. I am not a lawyer . I’m not even sure how you could verify that they were “illegally” reinvesting money at the end of term. In practice, these will be follow-on loans on existing property developments. Ratesetter could simply restructure deals, changing to loan *extension* with a midway staging payment to replace the balloon payment interest. We have neither control nor visibility. Do you track the maturity of all your existing loans and see whether they repay when they ought to, or are loan extensions offered even in normal times? I certainly didn’t. I’m not saying this is how it *would* be done. I’m saying that we are dealing with financially sophisticated entities, paying city lawyers and accountants £500/hr in their own interests. Whereas we have no visibility of the Ts and Cs of underlying contracts, and view the playing field through the medium of a piece of wet string. You can’t really think you are going to come out ahead on that, do you?I probably wouldn't and I probably won't need to, my money is mainly RYI'd in the five year, there's an unlent placeholder in the 1 year just in case, and a small amount in Max coming back slowly by stopping reinvesting using set your own (high) rate, which I am assuming will continue to work. But I think the FCA or the Ombudsman should have enough guns if RS changed the goal posts. It would really be a 'neat trick' if RS could force lenders to continue lending indefinitely (forever?) possibly at zero % interest rate. Sounds like a cracking business opportunity, maybe I should buy Metro shares after all!
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Sept 20, 2020 20:47:21 GMT
On that basis, what if everybody in the RYI queue asked to close there accounts would RS just then stop there re- investments, I think not, ratesetter aren't stupid. No they are simply devious. If so devious why invest with them
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Sept 21, 2020 6:11:54 GMT
If so devious why invest with them What a silly statement. Why are there so many RYI's? I guess its because people no longer trust RS and want out. not really it seems all the messagess you post are linked to how it was a devious unfair type operation.
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gmd78
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Post by gmd78 on Sept 21, 2020 7:24:31 GMT
Quote : not really it seems all the messagess you post are linked to how it was a devious unfair type operation. : Unquote.
Which camp are you in, those who wish to shut down the beliefs and opinions of others that differ from your own and repetitively describe all dissent as moaning?
Or those who are unwilling to be silenced?
In the course of reasoned debate, the choices are definitive, there are only two.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Sept 21, 2020 7:33:26 GMT
not really it seems all the messagess you post are linked to how it was a devious unfair type operation. Not true. As a RS lover please explain why there are so many RYI's if RS are such a fab company? Could it maybe be a result of the company's actions? As a neutral I'm going to start with Coronavirus and some investors determining the potential for economic shock and looking to move to cash/mitigate risk. That inevitably raised liquidity concerns and so on. Many of RS actions stem from that ie probably consequence rather than cause.
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gmd78
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Post by gmd78 on Sept 21, 2020 7:44:18 GMT
As a neutral I'm going to start with Coronavirus and some investors determining the potential for economic shock and looking to move to cash/mitigate risk. That inevitably raised liquidity concerns and so on. Many of RS actions stem from that ie probably consequence rather than cause.
It's a good point and well taken, where I would differ, is in the bracketed insertion of: "Many of RS actions (but not all) stem from"...etc
As a former devotee of RS, some decisions taken were clearly not in the interests of investors. Those “particular” decisions have adversely affected the sentiment towards RS.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Sept 21, 2020 7:58:37 GMT
not really it seems all the messagess you post are linked to how it was a devious unfair type operation. Not true. As a RS lover please explain why there are so many RYI's if RS are such a fab company? Could it maybe be a result of the company's actions? the company was nearly profitable. look around and notice covid brought the world to it's knees not just RS.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Sept 21, 2020 8:38:32 GMT
the company was nearly profitable. look around and notice covid brought the world to it's knees not just RS. You have still not offered an explanation as to why so many people made RYI's. The Australian version of Ratesetter is now operating normally but then they didn't tamper with the original business model by bringing in A/P/M products. Ironic that Ratesetters stake in Plenti is worth more than the UK business. the level of covid was different there, the impact was different. Moreover, people follow people if everyone does RYI people join you need to make your own mind and not await my explanations
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coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Sept 21, 2020 10:47:02 GMT
the company was nearly profitable. look around and notice covid brought the world to it's knees not just RS. What utter nonsense.
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