alender
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Post by alender on Nov 20, 2015 0:16:09 GMT
Kevin are you saying that rates are not influenced by Ratesetter and there is no statistical evidence between the timing of Ratesetter offers and the lowering of rates.
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Post by westonkevRS on Nov 20, 2015 7:38:54 GMT
Kevin are you saying that rates are not influenced by Ratesetter and there is no statistical evidence between the timing of Ratesetter offers and the lowering of rates. If course not, marketing campaigns usually bring in money in the short term and influence rates. I'm talking medium term, i.e. a trend over 6 months or more. Look at the rates in H2 2013 and you'll see what I mean... Kevin.
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arbster
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Post by arbster on Nov 20, 2015 7:43:24 GMT
Kevin are you saying that rates are not influenced by Ratesetter and there is no statistical evidence between the timing of Ratesetter offers and the lowering of rates. That's not manipulation, it's market forces, as you would expect from a properly functioning market. Now, it's a relatively small market, which means Ratesetter's actions, including promotions/offers and probably the active management of loans can and will have short-term impacts on rates, and some of that may indeed be deliberate, but the market will return to some sort of equilibrium over time. Personally, my experience of Ratesetter is fine - I engage with it when money gets paid back, or I have funds that need a home - if the rate's no good, my money goes elsewhere.
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pikestaff
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Post by pikestaff on Nov 20, 2015 8:15:05 GMT
So I went and had a look at those Ts+Cs (well, actually the FAQ) and here's what I found:- "If a situation occurred where there are insufficient funds on the market to finance existing loans, the Lender would be 'locked-in' to the contract until the Borrower had repaid their loan.
This situation has never occurred before, nor do we envisage it happening in the future, but we feel it is necessary to clarify the procedure should this scenario arise.
If your loan contract is locked in for a longer term, the entire contract rate would be at the rate of the original contract. So if you had a 1 month loan at 3.5% which was locked in for 12 months, the entire contract rate would remain at 3.5%".That bothers me. I'm going to mull it over for a bit to see how much. I never realised this at all. Thanks for highlighting it. I bet this comes as a surprise to a lot of people so should really be more prominent on the website. It's in both the T&Cs and the FAQ so they are not exactly hiding it. Having said that, people are very bad at reading this stuff. I tend to agree that the point should be flagged even more visibly on the monthly market, where the greatest mismatch occurs. The other thing lenders in the shorter markets (especially 1 month) need to be aware of is that if the provision fund looks like running out a Resolution Event will be called, at which point ALL funds are pooled and repaid from ALL loans pro-rata, so everyone ends up with a bit of everything. The monthly market is not a good home for money where you absolutely MUST have the liquidity. The risk is low, but it's not zero.
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pikestaff
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Post by pikestaff on Nov 20, 2015 8:27:52 GMT
...What isn't clear is whether or not RS have to accept any monthly rate? If you are stuck in at 3.5% and you moan on this forum and I stick my offer in at 19% or 99% do RS have to accept it to release you from your 3.5%, or will certain high rates be treated as market having no effective offer? Good question! Though westonkevRS has explained that RS have other levers to pull which should ensure it does not happen. They will have backstop sources of liquidity at more sensible rates. If that liquidity dries up it will be for a reason, and we will probably be headed for a Resolution Event anyway.
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bigfoot12
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Post by bigfoot12 on Nov 20, 2015 8:49:08 GMT
...What isn't clear is whether or not RS have to accept any monthly rate? If you are stuck in at 3.5% and you moan on this forum and I stick my offer in at 19% or 99% do RS have to accept it to release you from your 3.5%, or will certain high rates be treated as market having no effective offer? Good question! Though westonkevRS has explained that RS have other levers to pull which should ensure it does not happen. They will have backstop sources of liquidity at more sensible rates. If that liquidity dries up it will be for a reason, and we will probably be headed for a Resolution Event anyway. I accept that I am talking about unusual and unlikely situations, but I like to have some liquidity ready to seize any opportunities that come along. When the UK was defending its membership of the ERM, overnight libor went to 99%, one week rates were over 20%, it would be frustrating if perhaps a Brexit vote caused something similar and yet I found myself trapped at 3% in a product I had expected to repay. As I don't understand exactly how it might work I stick to 3 and 5 year on RS.
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pikestaff
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Post by pikestaff on Nov 20, 2015 9:26:45 GMT
Good question! Though westonkevRS has explained that RS have other levers to pull which should ensure it does not happen. They will have backstop sources of liquidity at more sensible rates. If that liquidity dries up it will be for a reason, and we will probably be headed for a Resolution Event anyway. I accept that I am talking about unusual and unlikely situations, but I like to have some liquidity ready to seize any opportunities that come along. When the UK was defending its membership of the ERM, overnight libor went to 99%, one week rates were over 20%, it would be frustrating if perhaps a Brexit vote caused something similar and yet I found myself trapped at 3% in a product I had expected to repay. As I don't understand exactly how it might work I stick to 3 and 5 year on RS. I distinguish between cash where I must have the liquidity and cash which is parked waiting for an opportunity. The former is in the bank. A good chunk of the latter is in RS monthly because I can live with the liquidity risk.
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alender
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Post by alender on Nov 20, 2015 17:15:07 GMT
Kevin are you saying that rates are not influenced by Ratesetter and there is no statistical evidence between the timing of Ratesetter offers and the lowering of rates. If course not, marketing campaigns usually bring in money in the short term and influence rates. I'm talking medium term, i.e. a trend over 6 months or more. Look at the rates in H2 2013 and you'll see what I mean... Kevin. Then this is not a conspiracy theory. On the positive side I do invest with Ratesetter and I am generally happy with the platform especially the fact that you lend to low risk borrowers which suits my risk profile.
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Post by westonkevRS on Nov 21, 2015 8:26:36 GMT
As I don't understand exactly how it might work I stick to 3 and 5 year on RS. Couldn't agree more, as the old maxim goes "if you don't understand it. don't invest in it". That said, that caused lots of consumer investors to pile into retailer stocks....
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alender
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Post by alender on Nov 21, 2015 9:50:50 GMT
Kevin are you saying that rates are not influenced by Ratesetter and there is no statistical evidence between the timing of Ratesetter offers and the lowering of rates. That's not manipulation, it's market forces, as you would expect from a properly functioning market. Now, it's a relatively small market, which means Ratesetter's actions, including promotions/offers and probably the active management of loans can and will have short-term impacts on rates, and some of that may indeed be deliberate, but the market will return to some sort of equilibrium over time. Personally, my experience of Ratesetter is fine - I engage with it when money gets paid back, or I have funds that need a home - if the rate's no good, my money goes elsewhere. I am having trouble reconciling your comments, first you say “That's not manipulation” and latter in the same paragraph you say “and probably the active management of loans can and will have short-term impacts on rates, and some of that may indeed be deliberate”. You also have the caveat “the market will return to some sort of equilibrium over time”. Therefore how would you describe market forces in play in the period of time before the equilibrium is achieved. Also isn’t the active management of loans an ongoing process, if so I fail to see how this is short term. As I have said I am generally happy with Ratsetter and will invest through them but this does not mean I am happy with everything they do.
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arbster
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Post by arbster on Nov 21, 2015 16:40:11 GMT
That's not manipulation, it's market forces, as you would expect from a properly functioning market. Now, it's a relatively small market, which means Ratesetter's actions, including promotions/offers and probably the active management of loans can and will have short-term impacts on rates, and some of that may indeed be deliberate, but the market will return to some sort of equilibrium over time. Personally, my experience of Ratesetter is fine - I engage with it when money gets paid back, or I have funds that need a home - if the rate's no good, my money goes elsewhere. I am having trouble reconciling your comments, first you say “That's not manipulation” and latter in the same paragraph you say “and probably the active management of loans can and will have short-term impacts on rates, and some of that may indeed be deliberate”. You also have the caveat “the market will return to some sort of equilibrium over time”. Therefore how would you describe market forces in play in the period of time before the equilibrium is achieved. Also isn’t the active management of loans an ongoing process, if so I fail to see how this is short term. As I have said I am generally happy with Ratsetter and will invest through them but this does not mean I am happy with everything they do. That's rather like saying that the Bank of England manipulates the stock market by raising interest rates, or the Government does by making Budget statements. They're closely connected and sometimes the timing of decisions will be influenced by understanding the effect on markets and the economy as a whole, but it's not manipulation. Similarly, if Ratesetter know that they have a shortage of lender money which is leading to rates being driven up, they can seek to attract new lender money via promotions. They've not changed the lender rates directly, but have re-set the market. This won't be great for existing lenders, but presumably is good for the new ones and benefits borrowers, but equilibrium will be regained in due course. I guess I'm just drawing a distinction between direct manipulation of rates and understanding the market well enough to ensure the effects of managing the business are "beneficial" to the overall operation of the business/market. I guess there's always room for machiavellian undertones around whose benefit those effects are aimed at...
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Post by brokenbiscuits on Nov 21, 2015 18:35:50 GMT
Worst day 21 rates ever? When does the £50 for £1000 offer end?
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alender
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Post by alender on Nov 21, 2015 18:44:41 GMT
Sorry but you are the one who said that it was manipulation, I said influenced.
As to your points it is common knowledge that the Bank of England rates affect asset prices which includes many things including stock markets. Budgets are there to raise taxes, pay for public services, influence better behaviour, grow the economy etc. Neither of these examples you gave are to help grow a particular company or for personal gain.
The question for me is when a course of action influences a market (outside normal market forces) it is usually made for a reason, the Bank of England are very clear what actions they take, the reason for the action and to a large extent so is the Chancellor. I am not sure that Ratesetter actions in setting interest rates are as clear and offers like cash back in my opinion do not benefit lenders. They may well benefit borrowers but are they doing it for this reason or to increase the growth rate of Rattsetter, I let you make up you own mind but please do not get mixed up with Machiavellian plots, IMHO it is much simpler.
I also believe it is in all of our interests to find out as much as possible how rates are set and the more transparency the better. I personally would like to see less volatile rates than those which I have seen in the last few months.
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jlend
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Post by jlend on Nov 21, 2015 22:22:01 GMT
I think intra day/week/month volatility will remain a feature of ratesetter. This volatility will suit and be acceptable to some lenders but not all.
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Post by westonkevRS on Nov 22, 2015 8:07:03 GMT
I also believe it is in all of our interests to find out as much as possible how rates are set and the more transparency the better. I personally would like to see less volatile rates than those which I have seen in the last few months. The way the Market Rates are quite transparent and outlined in the blog ( www.ratesetter.com/blog/article/the_way_we_calculate_the_market_rate_is_changing) , I'm not sure we can get more transparent other than allowing a download of every contract. Although each loan is available for download and analysed in great detail by AltFi.com. So if you want to double check that's probably possible. What we can't be transparent about because we don't know is lender motives for setting whatever rates they decide and for whatever reason. And the timing of when borrowers come to the platform. Kevin,
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