|
Post by ruralres66 on Nov 19, 2016 14:03:02 GMT
I am tracking general events and the threads on the forum in particular regarding the "health" and future prospects of P2P. I am doing a "DD", "what if" scenario and testing a Current sell out exercise. There are enough worrying signs, within and external in the industry for me to start getting cold feet about P2P and it's sustainability for me in particular. The Autumn Statement will soon be another pointer, especially if Phillip Hammond returns to printing money Q E and effectively underwriting bank loans and cheap money into the system. Firstly, I am trying to re understand how sellouts did work. I will work through this but any others with a similar interest or need might wish to help out with their understanding expertise. In August, I did a series of test and actual sellout events (and incurred quite high fees - which my tax statement from RS suggests is actually tax deductible). I am working though the past information and figures I gathered on this and wonder how RS recent changes to T&C may or may not impact on what was stated by RS in 2013, regarding sellout when I first signed up. www.ratesetter.com/blog/article/new_sellout_function_and_contract_changes_blogI remember that fees were more modest if you didn't do a complete sellout of a particular market. I suppose what worries me most is a drying up of borrowers and a withdrawal run with large percentage of lenders selling out. I am drawing down rapidly as others have also decided, however, I do have a significant footprint still of 6 figures, enough for a small house investment locally.
|
|
|
Post by ruralres66 on Nov 19, 2016 14:17:24 GMT
|
|
mike
Member of DD Central
Posts: 187
Likes: 121
|
Post by mike on Nov 20, 2016 15:00:39 GMT
I recently sold out a third of my loan book (5 yr) with an average fee of 2.4%.
|
|
dorset
Member of DD Central
Posts: 281
Likes: 187
|
Post by dorset on Nov 20, 2016 18:52:51 GMT
Sellout becomes more problematic the closer you get to the end of the loan term.
One of my RS accounts (used to hold some corporation tax due and no longer needed) has a balance of £450 all in three year loans with up to about 12 months left (about 60 loan contracts in total). This week I thought that I would tidy up this account and sellout out the balance. I was quoted £190 for £450 of loans. Speaking to RS they say that the problem is that there is a fixed sellout fee for each contract hence only offered about 40% of the total loan value.
Needless to say I will now just let the loans run out over the next 12 months - big disadvantage for RS over Zopa's Access IMO.
|
|
|
Post by brokenbiscuits on Nov 20, 2016 19:13:07 GMT
Will cost me 5.5% to sell out of my loans.
I had a look to see what it would cost just to pull out only one hundred quid. But that was the same... £5.48 as a fee.
Happy for them to keep earning the 6.5 up to 6.9 to term, it's just a hassle to keep logging in to pull out a few quid every now and then.
If fees were not so ridiculously high I would liquidate everything now. Same as I would be happy to top up if rates of return were higher and stayed higher.
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,906
Likes: 11,127
|
Post by ilmoro on Nov 20, 2016 19:55:57 GMT
Will cost me 5.5% to sell out of my loans. I had a look to see what it would cost just to pull out only one hundred quid. But that was the same... £5.48 as a fee. Happy for them to keep earning the 6.5 up to 6.9 to term, it's just a hassle to keep logging in to pull out a few quid every now and then.If fees were not so ridiculously high I would liquidate everything now. Same as I would be happy to top up if rates of return were higher and stayed higher. Just set it to send the funds back automatically. Ive been sweeping my holding account to a bank account weekly though probably need to chenge it to monthly now as Ive only got £20 left invested.
|
|
|
Post by davidspindle on Nov 22, 2016 3:16:05 GMT
I have only invested in 5 year loans, starting in 2011. For about a year I have not invested new money or recycled at less than 5.8%, gradually withdrawing most repayments. I have seldom sold loans but have frequently tested the function. I used to be able to sell for a cost of 1% or so but current costs are much greater.
Withdrawal of the 3 year market was a significant factor in increasing sellout costs. In the year or so before that change another factor was the extreme volatility in 3-year rates, probably due to the punitive change in the algorithm for calculating the re-investment 'Market rate'. Before the change, selling a loan more than 2 years old involved a penalty equivalent to the difference in the 5 and 3 year rates at the time of the sale. When 3 year rates began to decline and oscillate, sellout costs fluctuated but generally increased. It appears that the penalty is now the difference between the 5 and 1 year rates.
When selling out RS loans the investor has no control over which loans are sold. Since Ratesetter loans are amortising, the age of the loan at the time of sale is significant. Older loans are repaying more capital than interest.
Ratesetter is a commercial operation, dedicated to profits. It is becoming a mature business in a maturing market. There is too much money from naive investors and insufficient demand. Ratesetter's margins are independent of investor or borrower rates so their incentive is to maximise volume and tweak the algorithms to maximise profit.
The good times for RS investors are over.
|
|
|
Post by sayyestocress on Nov 22, 2016 9:17:25 GMT
Just set it to send the funds back automatically. Ive been sweeping my holding account to a bank account weekly Likewise. It's a great feature that I wish other sites offered. No other P2P platform offers such great control over what gets re-invested, how it gets re-invested and automating income to your bank account. I've not found another platform like this (yet). It's just a shame RS have exiting their platform stacked so heavily in their favour rather than the lenders; it's (relatively) painless for them for the lender to gradually withdraw and make it simple/automated for the lender, but they make it massively painful to exit in a hurry. I just checked the sell out fees for my 5 year market loans and the fee is roughly what you can currently get at market rate in the 5 year market. I'm all for businesses making money and being profitable, but the 0.72% average sell out fee quoted on their site to represent selling out of the 1 and 5 year markets is frankly scandalous and will mislead people into thinking they can get their 5 year money out without too much of a hit.
|
|
|
Post by ruralres66 on Nov 22, 2016 11:03:46 GMT
Many thanks for sharing your experience and thoughts. I think this is an area which RS has left overdue for some dialogue and update of information.
It does need some outside scrutiny and independent expert analysis, which is beyond me as a relative "naive"... lender! I have approached FT Kadhim Shubber to see what he makes of it!
Come on RS, give us more info!
|
|
|
Post by Deleted on Nov 22, 2016 13:39:38 GMT
Theres a Times journalist who lurks around this forum too, wrote a couple of articles about savingstream recently. Give him a try
|
|
|
Post by stevepn on Nov 22, 2016 21:53:44 GMT
I had £17,000 in and at the beginning of September I started withdrawing the monthly interest and any early repayments. I now have £8,500 left. So if you have £100,000+ do the same and in 6 months time you will probably have £30,000 left without incurring any fees.
|
|
|
Post by westonkev on Nov 23, 2016 7:05:41 GMT
I had £17,000 in and at the beginning of September I started withdrawing the monthly interest and any early repayments. I now have £8,500 left. So if you have £100,000+ do the same and in 6 months time you will probably have £30,000 left without incurring any fees. This sounds a little like you got "lucky" rather than the norm. if you had only just started lending there is a good chance your money was linked to a smallish volume of loans (RateSetter doesn't split your cash into parcels, as diversification is provided by the Provision Fund). If these small number of loans defaulted, paid back early or were refinanced then you'd have disproportionately have more cash back than normal. You could have got "unlucky" and have only one borrower who is paying down as normal over 5-years. In this scenario you'd have had hardly any cash back by now. Kevin.
|
|
spiral
Member of DD Central
Posts: 910
Likes: 456
|
Post by spiral on Nov 23, 2016 7:38:53 GMT
I have had about 17% returned over 7 months from a diversified portfolio, primarily in the 5 year market. This equates to about 29% per year which is about 50% more than you would expect using a crude measure of 20% expected capital repaid per year.
|
|
|
Post by stevepn on Nov 24, 2016 20:57:17 GMT
I had £17,000 in and at the beginning of September I started withdrawing the monthly interest and any early repayments. I now have £8,500 left. So if you have £100,000+ do the same and in 6 months time you will probably have £30,000 left without incurring any fees. This sounds a little like you got "lucky" rather than the norm. if you had only just started lending there is a good chance your money was linked to a smallish volume of loans (RateSetter doesn't split your cash into parcels, as diversification is provided by the Provision Fund). If these small number of loans defaulted, paid back early or were refinanced then you'd have disproportionately have more cash back than normal. You could have got "unlucky" and have only one borrower who is paying down as normal over 5-years. In this scenario you'd have had hardly any cash back by now. Kevin. What worries me is are these payments defaults or people actually paying back early?
|
|
|
Post by caveman38 on Jan 15, 2017 9:44:16 GMT
Could someone please guide me through the procedure of cashing in loans. Providing the penalty is not too high I would like to raise some money I have in 1 year loans that I've had for a couple of months. They are at 4%, so would I take a hit on my capital or just on a reduced interest return. Thanks.
|
|