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Post by GSV3MIaC on Nov 17, 2016 14:40:24 GMT
/mod hat off
I don't believe that to be the case with the AC instant/30 day accounts. Yes, it is the case with the GBBA and GEIA accounts, but afaik the 'instant access' is not affected by a dud loan until/unless there are enough of them that liquidity has dried up. That's why you get 3.x% or 4.x%, rather than the higher rate on offer for the 'at risk' (of having your cash locked in) GBBA/GEIA.
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Post by khampson on Nov 17, 2016 14:45:27 GMT
/mod hat off I don't believe that to be the case with the AC instant/30 day accounts. Yes, it is the case with the GBBA and GEIA accounts, but afaik the 'instant access' is not affected by a dud loan until/unless there are enough of them that liquidity has dried up. That's why you get 3.x% or 4.x%, rather than the higher rate on offer for the 'at risk' (of having your cash locked in) GBBA/GEIA. According to customer services, the instant and 30 day account can also get money locked into it in the case of a repayment issue unless I have been incorrectly informed.
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Post by pepperpot on Nov 17, 2016 14:54:35 GMT
The issue I have with AC is that if a loan defaults (expected 6%+) then even on the instant and 30 day account, your money becomes locked in, the recovery process could take months or even years, it is only when all avenues have been attempted to recover the loan will the provisional account pay out and that is up to AC if they will on a particular loan. I am in the rolling RS account and I know a month my money should be back in my holding account although there is no guarantee, I suppose that is why AC pay 3.75% for the instant and 4.25% for the 30 day notice account. Just to add AC diversify your account for you lending up to 20% to a borrower, that is a little high for me, some are ok with that but I'm Not, worst case would be deploying £10000 into the instant account and £2000 going to a borrower that misses a payment and this money becomes locked into the system until it is resolved. Sorry, but I agree with GSV. AIUI, In a normally functioning market (kind of akin to the current RS one, i.e. a resolution event not yet occurred), any funds you have in QAA/30DAA aren't locked in by a default. The algorithm spreads all loans held by QAA evenly amongst all invested funds so everyone has a tiny % in the recently disclosed £13 of a troubled loan. I can still access all my funds in the QAA (30DAA is a subsection of the QAA so same rules apply), if I did, my bit of the default would be distributed amongst all other funds in the account. Secondly you've lumped the 20% diversification rule into QAA, it's only for the GEIA/GBBA accounts at 7%. Those funds would indeed be locked in for the duration of the loan till it's resolved one way or another. Investors in that scenario would only take a hit if the PF wasn't able to make lenders whole again, but as the two 7% accounts invest in loans on a global scale, it's not the individuals 20% that matters but whether the accounts are sufficiently diversified to carry their investment in a particular loan. Hope that makes enough sense to be useful!
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Post by khampson on Nov 17, 2016 15:38:29 GMT
The issue I have with AC is that if a loan defaults (expected 6%+) then even on the instant and 30 day account, your money becomes locked in, the recovery process could take months or even years, it is only when all avenues have been attempted to recover the loan will the provisional account pay out and that is up to AC if they will on a particular loan. I am in the rolling RS account and I know a month my money should be back in my holding account although there is no guarantee, I suppose that is why AC pay 3.75% for the instant and 4.25% for the 30 day notice account. Just to add AC diversify your account for you lending up to 20% to a borrower, that is a little high for me, some are ok with that but I'm Not, worst case would be deploying £10000 into the instant account and £2000 going to a borrower that misses a payment and this money becomes locked into the system until it is resolved. Sorry, but I agree with GSV. AIUI, In a normally functioning market (kind of akin to the current RS one, i.e. a resolution event not yet occurred), any funds you have in QAA/30DAA aren't locked in by a default. The algorithm spreads all loans held by QAA evenly amongst all invested funds so everyone has a tiny % in the recently disclosed £13 of a troubled loan. I can still access all my funds in the QAA (30DAA is a subsection of the QAA so same rules apply), if I did, my bit of the default would be distributed amongst all other funds in the account. Secondly you've lumped the 20% diversification rule into QAA, it's only for the GEIA/GBBA accounts at 7%. Those funds would indeed be locked in for the duration of the loan till it's resolved one way or another. Investors in that scenario would only take a hit if the PF wasn't able to make lenders whole again, but as the two 7% accounts invest in loans on a global scale, it's not the individuals 20% that matters but whether the accounts are sufficiently diversified to carry their investment in a particular loan. Hope that makes enough sense to be useful! Thank you for clearing this up for me, I was misinformed about this.
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Post by khampson on Nov 17, 2016 15:45:06 GMT
Sorry, but I agree with GSV. AIUI, In a normally functioning market (kind of akin to the current RS one, i.e. a resolution event not yet occurred), any funds you have in QAA/30DAA aren't locked in by a default. The algorithm spreads all loans held by QAA evenly amongst all invested funds so everyone has a tiny % in the recently disclosed £13 of a troubled loan. I can still access all my funds in the QAA (30DAA is a subsection of the QAA so same rules apply), if I did, my bit of the default would be distributed amongst all other funds in the account. Secondly you've lumped the 20% diversification rule into QAA, it's only for the GEIA/GBBA accounts at 7%. Those funds would indeed be locked in for the duration of the loan till it's resolved one way or another. Investors in that scenario would only take a hit if the PF wasn't able to make lenders whole again, but as the two 7% accounts invest in loans on a global scale, it's not the individuals 20% that matters but whether the accounts are sufficiently diversified to carry their investment in a particular loan. Hope that makes enough sense to be useful! Thank you for clearing this up for me, I was misinformed about this. I have just spoken to AC and they have informed me that money can be locked into the Quick access account and the 30 day notice account? Maybe it's worth checking yourself as to this as that's twice they have told me this.
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Post by pepperpot on Nov 17, 2016 16:25:15 GMT
I think the answer to the question "Can money get locked into loans in the QAA?" has to be yes, it would go against regulation for support to say otherwise, just like any P2P lending can lock you in, but... 'in normal market conditions' access is unrestricted. If you asked the question of Northern Rock whether you could get locked into their easy access savings account, what would have been the answer? They would have probably said no. Normal market conditions doesn't cover a queue half way round the block of people desperate to get their money out.
Ask the same question of RS, can you get locked into the rolling market? The answer again has to be yes. (but again, that is not how it operates 'in normal market conditions')
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Post by ratehopper on Nov 18, 2016 13:30:01 GMT
Low rates here to stay? Not so sure. Been a lot of talk recently in the financial press about potential increases in interest rates. If the Fed increases interest rates then the dollar will go up. That will put further pressure on the pound which will fall further against the dollar. The reason sterling fell in the first place is because Mark Carney and his chums prematurely reduced base rate (nothing to do per se with Brexit). That has produced inflationary pressure which will be hard to control without an increase in base rate. If the dollar surges on a Fed increase in rates then that, coupled with increasing inflation, may compel the BoE to increase UK base rate. If there is an increase, then it will be interesting to see if the likes of Ratesetter and Zopa start improving their rates to lenders or whether what they are really all about is improving their own profit margin. We will see.
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mark123
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Post by mark123 on Nov 18, 2016 14:30:27 GMT
Low rates here to stay? Not so sure. Been a lot of talk recently in the financial press about potential increases in interest rates. If the Fed increases interest rates then the dollar will go up. That will put further pressure on the pound which will fall further against the dollar. The reason sterling fell in the first place is because Mark Carney and his chums prematurely reduced base rate (nothing to do per se with Brexit). That has produced inflationary pressure which will be hard to control without an increase in base rate. If the dollar surges on a Fed increase in rates then that, coupled with increasing inflation, may compel the BoE to increase UK base rate. If there is an increase, then it will be interesting to see if the likes of Ratesetter and Zopa start improving their rates to lenders or whether what they are really all about is improving their own profit margin. We will see. I agree. In fact, it is not difficult to imagine building society rates in the next 5 years of 2%, 3%, 4%, 5% and 6% - reverting to the norm. In which case people who lend at today's rate of 4.2% locked in for 5 years will be unhappy. And selling out will be expensive.
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ashtondav
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Post by ashtondav on Nov 18, 2016 16:28:31 GMT
You can get higher in the one year market than the five year.
Lunacy, complete freakin' madness. Who are these fools?
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Post by chielamangus on Nov 18, 2016 17:14:34 GMT
I don't use Z, but RS don't set their rates. If the rates drop, then it's solely because the balance of supply and demand has changed, moving the rate. They have dropped slightly - as a quick glance at the historic chart will tell you. members.ratesetter.com/ratesetter_info/rate_trends.aspxI'm surprised this canard still holds sway with some people. RS is not a market between thousands of willing lenders and thousands of willing borrowers with a market rate being the outcome. In the middle is the RS monopoly which controls the rolling market to fund longer term loans. We might lend for 10-35 days (we don't know when we lend what the term will be) but nobody borrows for that term. RS fixes that market, and uses every trick to keep those rates as low as possible (just look at the default option one is always presented with) and then it lends our money at higher interest rates. It's not P2P. Actually I would call it something else but the controllers here would just delete my post if I spoke my mind. And before I get the usual response "Well if you don't like it, ****** off", I will just say that I AM ******ing off as fast as I can from that particular platform, but it takes time to wind down one's commitments.
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alender
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Post by alender on Nov 18, 2016 21:39:57 GMT
Just for the record I have lent on the rolling market and been allocated loans of 3 and 4 days, which matured on a weekend, given the wait to lend the money and a days lost interest to get it out of RS hardly a good investment. I have taken all short term money elsewhere now.
It is difficult to know where interest rates will go but with the signals from Teresa May, Donald Trump, increasing bond yields and a Fed December interest rate predicted, upwards looks likely. However Mark (this is not the time to raise interest rates) Carnage being kept on for a few more years at BOE decreases the likelihood of a UK interest rate rise but I think the BOE with have no choice but to eventually follow the FED. I am not sure central banks interest rates is the main factor keeping rates low but quantitative easing, if/when this is unwound then interest rates rises will be accelerated.
I am keeping away from any long term P2P lending as rates are so low they do not reflect the risk let alone potentially rising interest rates.
I cannot understand anyone (except those connected to RS) defending the so called RS market, it is so clear to me that RS do everything they can to reduce interest rate being paid. As a recent post states there is now more borrowing for 3 years but I bet we do not get the 3 year market back and RS continue to fund it form the cheaper Rolling market with the increased danger of a lock in for investors.
When I first raised RS chasing down rates last year most replies were negative and been accused a number of times of peddling conspiracy theories and in particular RS offers always below lowest lenders offers which we now know is true. There are a lot more people now which believe RS is gaming rates as the evidence mounts. RS can get away with this at present but as/when the market improves for lenders they may find a lot of there old customers have gone elsewhere and will find it difficult to get them back especially with recent goings on with the PF.
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oldgrumpy
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Post by oldgrumpy on Nov 18, 2016 21:50:10 GMT
The reason I don't accept that this is a real market between borrowers and lenders is that lenders can offer their rates, then RS (not the borrowers) sets a market rate with a questionable algorithm (avoiding higher night matching rates, which RS manipulates loans into regularly, rather than matching earlier in the day from existing lender offers). Having set this market rate, RS immediately declines to match loans at that rate with existing lender loans, but instead sets a new "borrower offer" usually 0.2% BELOW the market rate just set. This conveniently triggers the "lend right now" button for lenders who want funds utilised immediately, thus perpetuating the idea that no borrowers actually want to offer more. Minor real manual offers by other lenders often come in then, undercutting existing lender offers to be first in the queue. OK that's fine, but a series of these can temporarily drop the rate by a further 1%, but when the limited borrower RS offer is fulfilled, by jingo! RS loads up another "borrower" offer 0.2% below the new outlier low (real) lender offers, and this keeps the rates depressed for most of the day, the only matching being done being that which satisfies the borrower offers set by RS, plus any others for which the real borrowers are in a hurry for, and this sometimes causes a run on lender funds and rates rise to an extent. All this is then repeated late in the day and overnight to set the next day's market rate, which RS immediately declines to match, posting a new borrower RS offer c0.2% below the market rate ....etc etc etc. To get the best rates (usually) take a look at outstanding borrower offers at about 6pm (say £250K) then look at the lender offers to see how far up the list an overnight bulk matching session would have to go the clear the borrower backlog, and try a rate 0.1% below the top. It doesn't always work, but you can always try again next day. Note: as I write this, it is Friday. There is no significant backlog of borrower matching to be done on 5 year, so you're stuck with about 4.1%/4.2% probably until next week. Similarly with "rolling". There's almost no backlog, and 2.8%/2.9% is the going rate, 3% again next week, maybe. While more lender cash is still coming in this is easy for RS to do. If lender cash dries up to less per day than the waiting borrower requirements, rates will rise again, but that is up to the lenders. What happens now is RS's choice of method; that's their privilege. They want to be competitive to borrowers. Therefore I no longer grumble (much) when the 5 year rates tumble; I just don't offer any more money. I will not tie up for 5 years my resources for low 4%+ (or even 3%+) rates. edit: cross posted with alender
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Post by pelerin on Nov 19, 2016 7:52:21 GMT
First of all oldgrumpy, thanks very much for all your useful posts. Much appreciated. I'm not sure that the Ratesetter algorithm is the main reason why rates are going down so steeply at the moment. I would draw attention to the following: From the Financial Times August 19, 2016 "Brexit brings more bad news for savers" by Paul Lewis " ...(The Bank of England) is preparing to launch the Term Funding Scheme, which will earmark £100bn to cheaply lend to banks at around 0.25 per cent. This will be even worse for savers than its predecessor the Funding for Lending Scheme, which has lent banks £60bn at 0.75 per cent. When it began in summer 2012 it caused a precipitous drop in savings rates and they have drifted down further ever since. A larger quantity of even cheaper money will mean rates paid to savers will continue to fall. " I think the 2012 Funding For Lending (FLS) scheme started in August 2012. On the Ratesetter website, look at Ratesetter Info - Rate Trends and select a time period from (say) April 2012 to August 2014. Rates started dropping immediately after FLS was introduced and you can then see a steady fall in 5 year rates which reached a minimum about a year later. It then recovered - but not by much. Similar things happened in the savings market. See graph in the following link- www.retirementinvestingtoday.com/2014/07/best-uk-savings-account-interest-rates.html Still let's look on the bright side - on 31st October 2016 a borrower offer of £1.3m appeared out of the blue at about 16:00 and lender offers up to about 5.7% were taken even though market rate was only 4.7%.
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