duck
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Post by duck on Nov 16, 2015 10:54:11 GMT
3.4% in the 3 yr market as I type lower than monthly and yearly lots of small amounts in 0.1% increments.
...... sometimes I wonder.
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bigfoot12
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Post by bigfoot12 on Nov 16, 2015 11:43:54 GMT
3.4% in the 3 yr market as I type lower than monthly and yearly lots of small amounts in 0.1% increments.
...... sometimes I wonder. If only samford71 could sell the implied 6m - 1y forward that he wanted to buy in this post 3 year higher than 5 year !
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Post by moneyball on Nov 18, 2015 19:24:30 GMT
To be precise, having sold it implicitly through the 3-year, I'd need to buy it back. What a shame I can't Is RS the most volatile rates market in the world? No but it's giving Nigeria, Brazil and Turkey a run for their money. What exalted company to be in! As for Rhydian Lewis wanting Ratesetter to be "the rate that sets the people's rate", what a nightmare that would be. Can you imagine corporates fixing multi-billion loans off a 3-year rate that is 5.9% on Friday but sub 4% on Monday? Or mortgage owners being told that if only their mortgage fixed two day later they would have saved 2%? "People have lost faith in Libor" say RS. Frankly I think most people would screaming to go back to a 'manipulated' LIBOR rate. Better 0.25bp of manipulation by a City trader and stability than a 200bp random walk from RS.
The "peoples rate" was a long term goal/dream/expectation but I must agree with Samford here. In fact, Id go further... this is a little crazy for a seasoned RS investor, yet alone the relative stability of City practices.
Last Friday afternoon I saw the 3Yr rate had spiked so chipped in £1000, split £500 @ 5.8 and £500 @ 5.9. By the time I woke Saturday morning, the 5.8 had matched. The market had amounts down to about 5.1 but was fairly thin. First thing Monday, 3.8!!! Withdrew the £500 @ 5.9... no biggie..... until I looked Tuesday morning and saw last matched @ 6.0%!!!!
I know there's repayment schedules at play here and so on but with regards to 3Yr market specifically, there seems to be another significant factor happening on the borrowers side. Its as if RS approve (but don't process) 3yr loans for 2 or 3 days and then suddenly notice the paperwork piling up in the corner and go "damn, forgot about that." And then wait another few days before repeating the process. Further to this, is there a specific demographic of borrowers who lean towards very large (but sporadic) loans specialising over a 3 year period?
As I see it, RS these days in general is very conducive to the "click and forget" investor... but cross the 3yr market at your peril!
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registerme
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Post by registerme on Nov 18, 2015 22:25:09 GMT
For something aspiring to be "the peoples' rate" RateSetter is at the moment, for me, possibly the platform I lend on the most opportunistically. My funds on RS are very, very flighty.
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oldgrumpy
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Post by oldgrumpy on Nov 18, 2015 22:29:45 GMT
moneyball"Last Friday afternoon I saw the 3Yr rate had spiked so chipped in £1000, split £500 @ 5.8 and £500 @ 5.9. By the time I woke Saturday morning, the 5.8 had matched. The market had amounts down to about 5.1 but was fairly thin. First thing Monday, 3.8!!! Withdrew the £500 @ 5.9... no biggie..... until I looked Tuesday morning and saw last matched @ 6.0%!!!! I know there's repayment schedules at play here and so on but with regards to 3Yr market specifically, there seems to be another significant factor happening on the borrowers side. Its as if RS approve (but don't process) 3yr loans for 2 or 3 days and then suddenly notice the paperwork piling up in the corner and go "damn, forgot about that." And then wait another few days before repeating the process. Further to this, is there a specific demographic of borrowers who lean towards very large (but sporadic) loans specialising over a 3 year period?"RS sets the market rate from the previous sessions matches. Then they "find/set themselves" borrower offers around 0.2% below, then do little or no lending at any rate above those borrower offers for as long as possible. Then the next day, the market rate has to be reset at or around the first day's "borrower" offer rate (which has now all gone) and a fresh batch of borrower "offers" appears, again 0.1-0.2% below the market rate, and it all starts again. Eventually (as you say) it seems (like last night in 3yr) that a huge batch of higher rate matches are made, and the rate zooms up, then ... start again. This week on 5yr hardly anything was being matched on Monday and Tuesday from lender offers, yet the borrower offers at lower rates were being matched all the time. The market rates fell correspondingly. Were there really no real borrowers offering to match at the lowest lender offer for so long? Hard to believe. Today some of the lender offers were matched but not all that much. Now I've observed this pattern many times, and quite suddenly loads of matches are made from the lender offer money working gradually up the list. Fine. But how is it that RS can only find borrowers offering (say) 5.7 or 5.8% for several days then, sometimes within 24 hours can suddenly find £**K of borrower offers at 6.5%/6.6% when the lender pot is having the 6.7% offers matched? I'm convinced it is not the borrowers who are formulating the figures given; it is RS deciding what they will be thus influencing the "lend it right now" rate and the "last matched" rate and indirectly the market rate for the next day. Of course, this can only go on for a limited time, then a spike occurs. We are due for one in 5 year later this week (ahem!)
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alender
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Post by alender on Nov 19, 2015 0:44:04 GMT
I agree with you OldGrumpy. I am fairly new to this but I have kept a close eye on how the rates move and the matches occur. I agree there are definite patterns occurring which are more than would be expected from normal weekly or monthly movements.
For the 3 yr market I have noticed:-
If there is not much lenders money at lower interest levels then there are no borrows, when lenders money appears at the lower levels borrowers miraculously appear just below the lowest lender offer. This goes on for a time forcing the rates down, at some point there are no more lenders prepared to accept a low rate and not much seems to happen. Then from time to time a large borrower/borrowers take all of the available money up to a maximum of 6% but seems to leave some of the 6% money untouched. All borrows disappear and the cycle starts again.
If RateSetter cannot find enough Lenders at rates they like they come up with an offer like cash back which collapses the rates which then takes a number of weeks to get back to more normal levels.
From what I can see this is not a market but game played by RateSetter whose strategy is to reduce the lending rate and to train lenders to accept a lowers rate.
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Post by nutfield on Nov 19, 2015 10:32:01 GMT
I presume RS prefer to lend at lower rates as they draw in a bigger volume of borrowers and the quality of borrowers is likely to be higher. As a lender I accept RS's attitude as it is likely to lead to it being a more stable platform. However, I try to play the game to get as high a rate as possible for me.
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oldgrumpy
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Post by oldgrumpy on Nov 19, 2015 11:09:00 GMT
I consider the "borrower offers" column to be very suspect because it almost never suggests there are offers above the (chosen) rate, which is below the lender offers (which are real money). As soon as all those "borrower offers" are satisfied (or almost so), RS immediately starts lending at the rates lenders are offering, and continues to do so. Why are those matching borrower offers not displayed (or even matched) in all that time, sometimes for days on end? I have plenty in RS as it is my preferred "safer" P2P platform. It now has almost all of what I did have on Zopa, which I left because of low imposed fixed rates, which Zopa openly sets and doesn't always achieve. I believe that RS pretends that rates are set by (therefore controlled by) lenders, but RS has a hidden heavy hand in "managing" the lenders' pot of offers. That's OK by me. I never use "lend it right now" or "Market Rate" and RS makes moving my offers around a very easy process.
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jlend
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Post by jlend on Nov 19, 2015 12:47:49 GMT
When i first signed up with ratesetter, many years ago now, it did at least feel very different.
It always felt like ratesetter wanted to feel like a very simple low cost market of introducing borrowers to lenders who would be left to sort out rates between themselves.
As the different types and channels for getting potential borrowers on board increased,it has at least sounded more and more complicated with ratesetter playing a bigger role between potential borrowers and lenders. The role ratesetter plays also seems larger due to the monthly market which obviously funds actual loans longer than 1 month as we all know.
As ratesetter grows it will have to be careful it's operational processes and hence costs don't actually become more complex and expensive compared to banks ☺
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locutus
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Post by locutus on Nov 19, 2015 12:58:28 GMT
The role ratesetter plays also seems larger due to the monthly market which obviously funds actual loans longer than 1 month as we all know. Has this been confirmed by RS?
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oldgrumpy
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Post by oldgrumpy on Nov 19, 2015 13:21:09 GMT
RS sets the market rate from the previous sessions matches. Then they "find/set themselves" borrower offers around 0.2% below, then do little or no lending at any rate above those borrower offers for as long as possible. Then the next day, the market rate has to be reset at or around the first day's "borrower" offer rate (which has now all gone) and a fresh batch of borrower "offers" appears, again 0.1-0.2% below the market rate, and it all starts again. Eventually (as you say) it seems (like last night in 3yr) that a huge batch of higher rate matches are made, and the rate zooms up, then ... start again. This afternoon a "huge bunch" was matched at up to 5.9% in 3yr (don't know if any 6.0% was taken) with most recent MRs being 4.4%, 4.5% and 5.1% and nearly all of the lending being well sub 5%. I wonder when the next 5yr "push" will come? edit: There has been a lot of action on the one month market recently, at around 3.6%*, so am I to think that the considerable 3 and 5 year loan matching below indicated lender offers, is actually being funded from the one month market, where people (me included) are happy to take 3.6% for a month's commitment, all in order to massage 3yr and 5yr match rates down? * now 3.9%, with queues of borrower offers!!
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jlend
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Post by jlend on Nov 19, 2015 13:26:44 GMT
The role ratesetter plays also seems larger due to the monthly market which obviously funds actual loans longer than 1 month as we all know. Has this been confirmed by RS? There is an extreme example that ratesetter have kindly provided information on. Look on the 24 february 2015 blog entry on the ratsetter website. In the comments section someone asked about a 60month loan that was originally funded from the one month market.
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jlend
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Post by jlend on Nov 19, 2015 13:52:37 GMT
RS sets the market rate from the previous sessions matches. Then they "find/set themselves" borrower offers around 0.2% below, then do little or no lending at any rate above those borrower offers for as long as possible. Then the next day, the market rate has to be reset at or around the first day's "borrower" offer rate (which has now all gone) and a fresh batch of borrower "offers" appears, again 0.1-0.2% below the market rate, and it all starts again. Eventually (as you say) it seems (like last night in 3yr) that a huge batch of higher rate matches are made, and the rate zooms up, then ... start again. This afternoon a "huge bunch" was matched at up to 5.9% in 3yr (don't know if any 6.0% was taken) with most recent MRs being 4.4%, 4.5% and 5.1% and nearly all of the lending being well sub 5%. I wonder when the next 5yr "push" will come? edit: There has been a lot of action on the one month market recently, at around 3.6%*, so am I to think that the considerable 3 and 5 year loan matching below indicated lender offers, is actually being funded from the one month market, where people (me included) are happy to take 3.6% for a month's commitment, all in order to massage 3yr and 5yr match rates down? * now 3.9%, with queues of borrower offers!! In the comments in the blog entry on the ratesetter website on the 24th feb 2015 they do explain that they sometimes fund long loans from the monthly market. There is an example of a 60month loan originally funded from the one month market. They make it clear they may later make a profit or loss on the loan depending on how they manage to fund the loan over time.
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locutus
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Post by locutus on Nov 19, 2015 14:03:35 GMT
I'm not quite sure I understand. If they fund a 60 month loan from 1 month lenders, then they have to pay the full amount to the borrower on loan acceptance. That means in month 2, RS has to pay back the 1 month lenders. Before they do so, they will need to borrow the money themselves from another market (possibly 1 month again). Is this correct? If so, it seems like a dangerous game. What happens if they can't find the funds in month 2?
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bigfoot12
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Post by bigfoot12 on Nov 19, 2015 14:10:18 GMT
I'm not quite sure I understand. If they fund a 60 month loan from 1 month lenders, then they have to pay the full amount to the borrower on loan acceptance. That means in month 2, RS has to pay back the 1 month lenders. Before they do so, they will need to borrow the money themselves from another market (possibly 1 month again). Is this correct? If so, it seems like a dangerous game. What happens if they can't find the funds in month 2? You highlight my problem with the RS 1 month market - the lender is accepting a lower rate (for higher liquidity), but isn't being guaranteed that liquidity. This is because the first lender in your example is only paid back if RS can find a lender for the second month. In normal markets not a problem, but I wouldn't have wanted to be stuck in that at 3.5% in 2007. I didn't get the impression that they were doing lots of 5 year funded out of 30 days. I thought that it was mainly 18 month loans funded for the first 12 months in the 1 year and then in the 1 month thereafter.
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