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Post by westonkevRS on Jun 13, 2015 12:58:52 GMT
I think the very least that RS should do with this change is send an e-mail notifying you if YR has gone on offer below MR. We do send emails, not specifically related to the issues with Your Rate, but when money is sitting idle and not being lent. The problem is people don't read emails and then call to complain when money hasn't been lent. Alternatively we have ad-hoc telephone campaigns to warn people of idle money - but even this can go wrong when the customer lowers their lending rate and then there is a spike - they complain we lost them money. Argghhhhhh. The truth (as very evidently shown on this forum) is that it is near impossible to please everyone. The best we can do is simplify things and have functionality work as the name suggests. Any solution that pleases everyone ultimately becomes confusing and someone will complain. Your Rate lending at that chosen Your Rate is simple and will do just that. If you don't like that you can rely on Market Rate, or be an active RateSetter. You basically now have three very straight forward choices. westonkevRSwww.linkedin.com/profile/view?id=19236219
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Post by westonkevRS on Jun 13, 2015 13:02:31 GMT
The change from LIBOR style pricing to SONIA style pricing is welcome. (If you haven't heard of SONIA it is probably because there hasn't been a scandal to my out of date knowledge.) I'd not heard the acronym SONIA before, but this sums it up exactly. Prices set by real trades/loans matched; and not "offers" or hypothetical trades. The point of the RateSetter markets is that the market price is determined by lenders and borrowers in a real market place (the " Peoples Rate") - not individuals prophesying.
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spiral
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Post by spiral on Jun 13, 2015 13:04:16 GMT
I will be disappointed to see Your (minimum) Rate going. I have not changed this for many months
And this where the problem lies. I suspect there are many like you with rates set as low as 5% who will now find that is exactly the rate their money will now go out at! This then creates the effect that pikestaff said " The new method will tend to drive rates down, because low "Your Rate" offers will be accepted and will be included in the calculation of the day's "market rate", but high "Your Rate" offers will tend not to be accepted."
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oldgrumpy
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Post by oldgrumpy on Jun 13, 2015 13:27:26 GMT
spiralWhat I am meaning there is that if you elect for Market Rate and it is 6.8%, it will go back down to a lower rate if MR falls. However, (currently) if I elect for 6.7% on " Your Rate" and RS decides to put my YR up to 6.8% because of market rate, it doesn't then put it back down to my chosen 6.7% and leaves me stranded at 6.8% which is NOT my chosen rate. Maybe I misunderstood you, and we're saying the same thing. YR should be exactly what it now will be .... Your Rate with no interference from RS. It is lenders who were using YR as a convenient way of setting a "floor" who were misusing the facility in a convenient but unintended (by RS) way, who are complaining now. ed. cross posted with several above ... I'm a slow typer!
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oldgrumpy
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Post by oldgrumpy on Jun 13, 2015 15:15:40 GMT
I will be disappointed to see Your (minimum) Rate going. I have not changed this for many months
And this where the problem lies. I suspect there are many like you with rates set as low as 5% who will now find that is exactly the rate their money will now go out at! This then creates the effect that pikestaff said " The new method will tend to drive rates down, because low "Your Rate" offers will be accepted and will be included in the calculation of the day's "market rate", but high "Your Rate" offers will tend not to be accepted." This shouldn't be a problem if RS emails every lender a week or so before the transition, then emails a reminder the day before. People can adjust their settings accordingly.
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Post by rarrar on Jun 13, 2015 17:54:46 GMT
A quick read of how Market rate is and will be calculated suggests that it may rise relatively. Crudely at present MR is set to the minimum of the rates loans are matched over an unspecified? period ( excluding low outliers) In future it will be the weighted average of the rate loans are matched on the preceeding day. My feeling is that the former must be less than the latter. Also the amount of business done at higher YRs will push the next days MR up.
Or have I got this completely wrong ?
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spiral
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Post by spiral on Jun 13, 2015 18:11:50 GMT
What I am meaning there is that if you elect for Market Rate and it is 6.8%, it will go back down to a lower rate if MR falls. However, (currently) if I elect for 6.7% on " Your Rate" and RS decides to put my YR up to 6.8% because of market rate, it doesn't then put it back down to my chosen 6.7% and leaves me stranded at 6.8% which is NOT my chosen rate. Maybe I misunderstood you, and we're saying the same thing. This is different to what I understand. My understanding is : If there are 2 lenders, 1 at MR and the other at YR (6.7%) and todays MR is 6.8% both offers go on at 6.8, on that we agree. If neither of those offers get matched and tomorrow MR is 6.6%, both of yesterday's offers are stranded at 6.8. Today the MR offer goes on offer at 6.6, the YR goes on offer at 6.7 as per your request. You seem to be implying that the YR offer has changed to 6.8 and that is what your money will go on offer at. If that is what you're saying, I don't believe that is correct (at least it is never something I have observed). If all you are saying is that yesterday's offer is stranded, then that is also true of the MR offer because that isn't reset either.
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spiral
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Post by spiral on Jun 13, 2015 18:26:41 GMT
A quick read of how Market rate is and will be calculated suggests that it may rise relatively. Crudely at present MR is set to the minimum of the rates loans are matched over an unspecified? period ( excluding low outliers) In future it will be the weighted average of the rate loans are matched on the preceeding day. My feeling is that the former must be less than the latter. Also the amount of business done at higher YRs will push the next days MR up. Or have I got this completely wrong ? It depends. If there are enough people with a YR below say 6%, currently they are gettimg 6.4 to 6.8 because MR is above their selected rate. When the change is implimented, they will get exactly what they asked for so rates below 6.0 will get matched at the set rate and result in a lower overall average leading to tomorrows MR being lower and ultimately lowering tomorrows overall average etc. until the new equilibrium is reached. I suspect the effect of this will be less to do with the repayments but more the droves of new money that see £200K of money at x% and feel the need to undercut it in order to get it lent out quickly but the combimed effect of all of this will be to drive rates towards the lowest rate offered (which is probably a stranded rate that under the current system doesn't need changing).
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Post by westonkevRS on Jun 13, 2015 19:19:47 GMT
What I am meaning there is that if you elect for Market Rate and it is 6.8%, it will go back down to a lower rate if MR falls. However, (currently) if I elect for 6.7% on " Your Rate" and RS decides to put my YR up to 6.8% because of market rate, it doesn't then put it back down to my chosen 6.7% and leaves me stranded at 6.8% which is NOT my chosen rate. Maybe I misunderstood you, and we're saying the same thing. If neither of those offers get matched and tomorrow MR is 6.6%, both of yesterday's offers are stranded at 6.8. Currently: Someone with money at MR and not using YR will never have their money stranded, it will be reset to the latest MR (if it wasn't lent out) and be at the front of the queue for reinvested money. edit: as described in the FAQa: " If the order is not matched on that day, it will be updated to the next day’s Market Rate should it be lower." The person with YR will be stranded, and will be stranded at the MR which was set on the day their money entered the market (which could be higher than the YR value). It is possible that other people's money could begin to be matched at the original person's YR set level; but their money is actually "stranded" at the higher MR that happened to be on the day the original money entered the market but wasn't lent! The complication of the above, and the confusion between knowledgeable members of this forum clearly indicate it wasn't well understood and needed to change. That's why I pushed for a change to YR and the calculation of MR (to a SONIA model). Blame me if you will, I just really didn't like the YR functionality due to the stranded money and the lack of simplicity and clarity. Therefore 24th June 2015 onwards: YR will be set so that lenders " will get exactly what they asked for" I appreciate perhaps it could have been amended to something like a floor or minimum buy price, but simplicity was chosen. I also recognise some forum members have provided good ideas for a solution with variable time delays, amounts, etc - but again this just adds complication. RateSetter should be easy, uncomplicated and perhaps even a little boring! It's a market for long term investors, not day traders!
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oldgrumpy
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Post by oldgrumpy on Jun 13, 2015 19:22:06 GMT
What I am meaning there is that if you elect for Market Rate and it is 6.8%, it will go back down to a lower rate if MR falls. However, (currently) if I elect for 6.7% on " Your Rate" and RS decides to put my YR up to 6.8% because of market rate, it doesn't then put it back down to my chosen 6.7% and leaves me stranded at 6.8% which is NOT my chosen rate. Maybe I misunderstood you, and we're saying the same thing. This is different to what I understand. My understanding is : If there are 2 lenders, 1 at MR and the other at YR (6.7%) and todays MR is 6.8% both offers go on at 6.8, on that we agree. If neither of those offers get matched and tomorrow MR is 6.6%, both of yesterday's offers are stranded at 6.8. Today the MR offer goes on offer at 6.6, the YR goes on offer at 6.7 as per your request. You seem to be implying that the YR offer has changed to 6.8 and that is what your money will go on offer at. If that is what you're saying, I don't believe that is correct (at least it is never something I have observed). If all you are saying is that yesterday's offer is stranded, then that is also true of the MR offer because that isn't reset either. EEErrrgh! Enlighten us, Kev ... if you think it's worth the effort on a Saturday night in the wine bar. Signed Confused.grump.uk edit: 23:17 My post crossed with Kev's above - just seen it ... thank you Kevin.
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Post by westonkevRS on Jun 13, 2015 19:30:31 GMT
24th June 2015 onwards: YR will be set so that lenders "will get exactly what they asked for"
"Simples", as one of the co-founders is fond of saying.
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gnasher
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Post by gnasher on Jun 14, 2015 7:38:06 GMT
And then there was further confusion because the Market Rate works to two decimals, yet screen reporting and choice of rates is one decimal Could we just clarify this point of decimal places please westonkevRS. I had not realised that MR worked to 2 decimal places even though the system only ever displays it to one. If the system shows the bulk of that days MR orders going in at say 6.5%, does that mean that they are somewhere between 6.45% and 6.55? or between 6.50 and 6.59%? i.e. does a market rate of say 6.57 get displayed by the system as 6.5 or 6.6? This is important because if I invest manually after the days auto MR orders have been placed, my order may go infront of, or behind, the auto invested bulk? I have assumed so far that it would always be behind. Edit: Just checked one of my historic contracts for a period when I had MR set. It shows Interest Rate 5.85% Lender Return 6.0% Under definitions it says “Interest Rate” means the interest rate agreed between the Lender and the Borrower, but there is no definition of "Lender Return" that I can see. I presume this is something to do with RS fees?, not MR working to 2dp, so probably a red herring to the main point in question. Rather confused! I would like to understand this better.
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spiral
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Post by spiral on Jun 14, 2015 7:51:07 GMT
Currently: Someone with money at MR and not using YR will never have their money stranded, it will be reset to the latest MR (if it wasn't lent out) and be at the front of the queue for reinvested money. OK, I stand corrected, but if this was the case, my misunderstanding arose because I understood YR to be placed at MR or YR whichever was the greater. In the explanation that you gave, it was never placed at MR, just a rate that was equal to MR otherwise it would've came back down again as per the MR offer (if not matched). That said, I only ever use YR and on the three or so occasions that my YR was below MR, it got lent within a couple of days anyway. Now it will get lent quicker but at a lower rate. I still stand by my comment though that their should be an email message if YR is below today's MR.
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Post by westonkevRS on Jun 14, 2015 8:20:09 GMT
And then there was further confusion because the Market Rate works to two decimals, yet screen reporting and choice of rates is one decimal i.e. does a market rate of say 6.57 get displayed by the system as 6.5 or 6.6? This is important because if I invest manually after the days auto MR orders have been placed, my order may go infront of, or behind, the auto invested bulk? I have assumed so far that it would always be behind Interest Rate 5.85% Lender Return 6.0% Under definitions it says “Interest Rate” means the interest rate agreed between the Lender and the Borrower, but there is no definition of "Lender Return" that I can see. I presume this is something to do with RS fees?, not MR working to 2dp, so probably a red herring to the main point in question. I'll double check Monday regarding where your new money would sit. As I agree, if 6.57% is shown as 6.5% MR, then it would make sense to lend new money at 6.5% because in theory it would be in front of the queue. I think though, that on the basis of my experience, is that the two decimal places is only really important when old money is "stranded" at what appears the same MR (due to YR) but is actually marginally above the new MR (say by 0.01%) and therefore doesn't get lent. I'm pretty sure that for new money placed it needs to be a full 0.1% below the reported rounded MR. I've never seen new money go ahead of MR when lent at the same reported one decimal place MR. So even if 6.57% is reported at 6.5% I'm sure that you need to lend at 6.4% to get to the front. Therefore when YR stranded money is a think of the past with the "does as it says on the tin" YR, if my understanding is correct you will always have to lend at 6.4% if the reported MR is 6.5%, irrespective of it was rounded up or down for reporting on screen. @ westonkevRSwww.linkedin.com/profile/view?id=19236219
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Post by westonkevRS on Jun 14, 2015 8:31:08 GMT
That said, I only ever use YR and on the three or so occasions that my YR was below MR, it got lent within a couple of days anyway. Now it will get lent quicker but at a lower rate. I still stand by my comment though that their should be an email message if YR is below today's MR. That's the thing with YR, it worked fine 95% of the time. But when a strange combination of MR moving down and reinvested money not all gettting lent then it could caused confusion. Try explaining everything on this thread to a confused and angry lender on the telephone, hence the need for simplification. I think the warning (when YR is lower than the MR) is a very good idea. I'll propose that, although I'm sure it's already in the change plan. This should be on screen when they initially choose the YR, but afterwards I'm not sure a warning or email is needed. It would only be a concern when new (or returned not automatically lent on MR) money is placed on the Market. If they choose a lower YR they get "are you sure" warning. Otherwise when they've chosen a higher YR their money will eventually get lent when the MR rises to their YR level, the MR couldn't be higher without their money getting lent immediately beforehand. @ westonkevRSwww.linkedin.com/profile/view?id=19236219
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