stokeloans
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Post by stokeloans on Jul 19, 2015 8:23:17 GMT
With a rise in interest rates expected within the next 12 months what impact will that have on P2P lending ?
I currently re-invest in the 5 year market.Would you look at going short term for the forseeible future ?
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adrianc
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Post by adrianc on Jul 19, 2015 8:37:53 GMT
Any rate rise, when it does finally come, is going to be minimal. I'd doubt the rate will be over 1% at the end of 2016.
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bigfoot12
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Post by bigfoot12 on Jul 19, 2015 8:42:15 GMT
I think the end/unwinding of QE and funding for lending and the rest will have a bigger impact.
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jonah
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Post by jonah on Jul 19, 2015 9:00:55 GMT
Unwinding of QE? I wouldn't bet on that happening for decades if ever.
as for base rate, a material rise should increase returns on p2p, but should also increase defaults. I don't expect anything meaningful for at least 18 months though. Primarily as those first 0.25% will generate so much noise.
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Post by Deleted on Jul 19, 2015 9:50:09 GMT
My bigger concern is inflation
10% income, 40% tax when inflation is 0.5% is nice
10% income, 40% tax when inflation is 5% is horrible
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Post by mrclondon on Jul 19, 2015 10:40:50 GMT
Like others I simply can't see substantial rate rises on the horizon, and I agree that two 0.25% rises in 2016 is the most likely (spring and autumn).
Remember with a 5 year amortizing loan you are getting capital back every month to re-invest at what ever the prevailing rate is at the time. Or another way of looking at it, the average term for your capital on such a loan is 2.5 years, and my prediction is it will be nearly 2 years before base rates exceed 1%.
RS's recent cash back promotion has had more than a 0.5% effect on the market rate, so factors other than bank base rates will continue to predominate p2p markets IMO.
Rather than loan terms, I suggest as interest rates begin to rise the two areas to put more thought into are the underlying cashflow of the borrowers and security asset valuations (particularly property).
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Post by reeknralf on Jul 19, 2015 13:15:16 GMT
Always pleased when samford71 posts, but this time he's got ahead of me. What are the axes of 'the curve'? As it has a long end, I'm guessing the x-axis is time. |
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pikestaff
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Post by pikestaff on Jul 19, 2015 17:02:51 GMT
I agree with mrclondon and samford71. I think p2p rates are driven much more by the balance of borrowers and lenders. The impending introduction of ISAs will increase the supply of lenders, and I expect it to drive rates down significantly. Get today's rates while you can, but do be aware that the credit environment can only deteriorate from here, and do be very wary of asset valuations especially property. |
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mikeb
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Post by mikeb on Jul 19, 2015 18:56:01 GMT
With a rise in interest rates expected within the next 12 months ... belongs in the Jokes thread, surely?  Note that after the big headline grabbing "rates to rise by end of year, up to x % by 2018!" came the gabbled small print "ofcourseotherfactorscouldcomeintoplay" "andwhatwiththepriceoffishnothingiscertain" ... So as usual rates will rise, but not just yet, but maybe soon, and maybe not. My prediction is that it will have no effect at all on p2p until it actually happens.
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adrianc
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Post by adrianc on Jul 19, 2015 20:47:58 GMT
My prediction is that it will have no effect at all on p2p until it actually happens. My cynical side says that the actual happening is the bit least likely to have an effect on markets...
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