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Post by p2plender on Feb 23, 2014 12:34:53 GMT
When I first used RS and FC I was achieving rates of 7% plus yet now we're seeing rates nudge towards 5.5% and lower - in fact RS 5 year has touched sub 5% this last 12 months which is quite honestly worrying. Are people really fully aware of what p2p lending is? These rates of late are simply not worth the risk though I suppose lenders have gotten so hungry for yield they're happy to take these risks. Perhaps new kids on the block Wellesley may show the old timers how it should be done, here's hoping. Am I really being greedy wanting nearer 7% for risking my capital for 5 years?
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Post by davee39 on Feb 23, 2014 14:08:14 GMT
Yes, and good luck finding 7% from a reasonably safe company with a track history.
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Post by bracknellboy on Feb 23, 2014 17:14:30 GMT
Yes, and good luck finding 7% from a reasonably safe company with a track history. Bit unfair: I was once getting not far off that on instant access with IceSave and Kaupthing Edge. Oh, I see what you mean.
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agent69
Member of DD Central
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Post by agent69 on Feb 23, 2014 19:04:55 GMT
Yes, and good luck finding 7% from a reasonably safe company with a track history. Bit unfair: I was once getting not far off that on instant access with IceSave and Kaupthing Edge. You missed out on Iceland's Banki Hankipanki then?
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angrysaveruk
Member of DD Central
Back and to the left..
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Post by angrysaveruk on Feb 23, 2014 21:31:09 GMT
Reason rates on RS and zopa have dropped is because of all the free money banks have been getting from the government with the Funding for Lending scheme, meaning that interest rates on consumer credit have dropped. I would say RS at 5.7% is not that bad when you consider the risk of the investment. Assuming that the debt is with A rated counterparties then I would say it is pretty low risk considering the diversification you can get spreading out your loans. The average maturity is about 2.5 years on a 5 year investment, which gives you approx 2.5 * (5.7 -2.5) = 8% additional over a bank deposit of similar maturity. When you take into account the reserve fund you would have to have a default rate of about 10% to make your return equivalent to a bank deposit, which is 20 times their current default rate. The kind of scenarios in which that is going to happen (assuming they are doing their job and vetting borrowers) are pretty much end of the world. FC is alot more risky in my opinion and I would not put my money with them given the average returns they are offering - lending to LTD companies is far more risky than A rated consumer creditors. I could easily imagine 10% of loans you make to a basket of small LTD companies defaulting over a 5 year period - most small businesses fail.
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Post by p2plender on Feb 24, 2014 8:28:49 GMT
agent and brackdullboy, I'm sure they were banks and not p2p cos the last time I looked.
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Post by bracknellboy on Feb 24, 2014 10:47:01 GMT
agent and brackdullboy, I'm sure they were banks and not p2p cos the last time I looked. last time I looked they were neither.
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Post by p2plender on Mar 5, 2014 21:48:07 GMT
alas, back to poor rates in the 5 yr market....
Looks like a load of cash has arrived this week.
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bugs4me
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Post by bugs4me on Mar 5, 2014 22:22:29 GMT
alas, back to poor rates in the 5 yr market.... Looks like a load of cash has arrived this week. Be patient, seems usual for this time of the month. The rates will be back to 'normal' soon. Now I'm already beginning to wish I hadn't said that 
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Post by davee39 on Mar 5, 2014 22:37:07 GMT
Between May and July last year 5 yr rates fell as low as 4.8%, and generally were around 5%. Recent visits to 6% territory have been a bonus. I am happy with 5% + Provision fund + speed of lending. There seems to be a record amount of cash on the market and a seasonal dip in demand. We may be seeing the last of the decent Building Society bonds maturing, and the cash coming across to P2P.
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Post by cautious on Mar 6, 2014 8:02:25 GMT
Davee39 ....are you looking over my shoulder ? That's exactly my situation as a 60k bond has just matured and needs a new home. After pushing some into Santander, TSB and Isa the balance is headed for RS.
As someone who lives on savings income P2P provides the only other viable choice, as far as I can see anyway.
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markr
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Post by markr on Mar 6, 2014 10:23:02 GMT
I've been dribbling funds into the 5 year market for most of last year and currently my average rate is 5.5%, with my lowest loan part at 4.8% (when I had my settings as reinvest at market rate) and my highest at 5.9%.
One of the most interesting things to happen to rates was in July. Throughout early 2013, rates had been falling steadily, and had plateaued at about 5% for most of May and June. Then, pretty much overnight on the 18th of July, it rose to about 5.5% and has stayed there ever since. I remember it happening, but if you weren't around at the time you can see it if you look at the trend graph, set the start and end dates as May 2013 and March 2014, and it sticks out like a sore thumb.
I have no idea what happened that day, but thank God it did otherwise I reckon RS's rates now would be exactly where Zopa's are, bubbling around 5%.
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Post by richardh on Mar 6, 2014 10:29:17 GMT
I guess that lenders have become victims of Ratesetter's, and other P2P platforms', success.
In other words, as interest increases rapidly, more money is available to borrowers & this drives down interest rates.
In the short term, that scenario is likely to continue...unless the risk/return drives lenders away!
Personally, I've used Ratesetter exclusively for their unique Monthly market. However, that's reduced as rates dropped below 3%
The reason? I can get 3% to 5% on instant access with monthly, including a 3.02% cash ISA, in the banks & building societies where there's a zero risk.
Somewhere around £60,000, and increasing, can be 'invested' this way currently.
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Post by davee39 on Mar 6, 2014 12:45:24 GMT
including a 3.02% cash ISA, in the banks & building societies where there's a zero risk. Indeed, you can get 3% for 5 years on a cash isa with no risk to capital. But by the end of 2015 Base Rate should be about 2% if the economy continues to recover leaving you locked in for another 3 years with what might be a poor investment. (OK it already is a poor investment before you start!) Unfortunately I do not have a solution to this dilemma. Possibly a 1 year bond with RS, based on their current healthy capital position following a fund raising and see what next year holds, or a 1 year bond with Wellesley - high rate but could be locked in if a loan defaults, or just go for 5 years with RS/Zopa and reinvest the repayments monthly. Being undecided I plan to try all of the above, throwing in a bit of FC as well.
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mikeb
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Post by mikeb on Mar 6, 2014 21:11:27 GMT
But by the end of 2015 Base Rate should be about 2% if the economy continues to recover I like that optimism. The trouble is, what it "should" be, and what it "will" be are two different things. Don't forget, that a review of base rates will take place if unemployment falls to the magic number. Which we've selected to be a looooong way off, so basically, never. Then some damn fool went and got jobs and we nearly actually hit the target ... so the target was removed. Other things to consider, you know. I have a nasty feeling that those 2% goalposts you are looking at are moving away from you 
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