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Post by oldatheist on Jul 15, 2014 13:38:16 GMT
However RateSetter lent around £25m in June, so crudely let's called that £300m in the next year. £10m is just 3% so it's hardly going to move the markets. Only you the P2 lenders can shift our markets! Ah, but it is marginal money and that is where prices (interest rates) are determined. However, there's lots of alternatives to RS so the flow of money out should help prevent rates falling much. Compare RS with Wellesley: 5 year RS is currently 6.1-6.2 compared with W's Capital at 6.34 (real, nominal is 6.76) 3 year RS is currently 4.5 compared with W's Capital at 5.67 (real, nominal is 5.1) - yeah, don't ask me why W have done it this way 1 year RS is currently 3.5 compared with W's Capital at 4.8 (real, nominal is 4) - yeah, don't ask me why W have done it this way 1 month RS is currently 2.1-2.2 compared with W's 6 month Capital at 3.6 (real, nominal is 3) - ditto RS products are for income so the actual rate might be even lower (those days when money is unmatched). It's not an exact comparison, I know, but the only reason to go for RS at the moment is liquidity and risk spreading. But that is not a like for like comparison, if you take the 5 year income from both RS is around 6.1 and W is 5.83. If you want you entire capital tied up for the full term then W is the way to go if not RS is the better option.
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Post by chielamangus on Jul 15, 2014 14:37:45 GMT
But that is not a like for like comparison, if you take the 5 year income from both RS is around 6.1 and W is 5.83. If you want you entire capital tied up for the full term then W is the way to go if not RS is the better option. I think I said it was not exactly like for like! But if you look at the return (I use XIRR) on W 5 year Income the figure is 6.13 rather than 5.83 nominal which is almost exactly the same as RS currently (6.1 nominally AND using XIRR). The only difference is that RS gives you a bit of capital back each month while W returns it at the end (so fewer decisions and less work with W as far as I am concerned).
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Post by geoffrey on Jul 15, 2014 16:27:17 GMT
I've had some spikes up to 6.6% recently on RS, suddenly matching some offers I'd more or less forgotten about. This has renewed my interest in RS and although it's settled around 6.2%, I noticed that the predicted volume on the 4/5 year markets (combined) is looking pretty high and the predicted volume coverage ratio is regularly less than 1. I'm wondering how the predicted matches are calculated, because over the last few days they've been showing up to (and occasionally more than) £1 million for the next 24 hours, although the reality over any 24 hour period I've monitored has been considerably less (a third of that). So either a lot of borrowers are not willing to take loans > 6% (which is of course 6% for the lender, higher for the borrower), or else they're holding on for a rate drop. How reliable are those predictions on the RS volume tab?
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Post by teapothouse on Jul 16, 2014 6:21:06 GMT
Yes geoffrey I too have the same question over the expected loan volumes because it affects where you might place a loan in the market. The expected volumes always seem over optimistic - for instance in the next 24 hrs it says around 2M which is probably much bigger than any single 24hrs volume to date. What makes today so special?
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spiral
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Post by spiral on Jul 16, 2014 8:21:24 GMT
I would expect RS to have a pretty good algorythm that evaluates from known data the % that take up loans on day 1, day 2 etc after approval and even days of the week and by linking that to amounts approved should be able to predict the average expected. It posibly even takes account of expected deposits the following day. Of course as you say, some will hold out for specific rates which may distort the market slightly but ultimately, if they want the money, they have a finite time to accept it so they may be forced eventually to accept higher rates.
Where I have seen take up markedly down from predicted on any given day, the expected volumes for the next day usually rise quite a bit.
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Post by westonkevRS on Dec 19, 2014 7:03:16 GMT
My query is whether the Business bank is getting a deal not available to the rest of us, as they do at funding circle. If they only want to lend to business folks for business purposes it sounds as if they are .. I can't pick who I lend to!! So some more details of how it will work please .. At least with FC we know how it works, even if it's a deal we can't have. It took us a while, but I hope this blog answers a few questions: www.ratesetter.com/Blog/Article/Gaining_depth_and_breadthInstitutional lending makes up such a small percentage of our lending that (a) they cannot move the markets, especially when it's lent on the same terms as normal lenders, and b) RateSetter is clearly keeping the Peer in P2P money. Many of the "businesses" are in reality small single or family owned, in my mind this isn't instutational lending. So the Peer makes up 96% of our lender base. This isn't through lack of potential, this is our philosophy. Kevin.
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pikestaff
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Post by pikestaff on Dec 19, 2014 7:36:02 GMT
westonkevRS, thank you. Interesting blog. It would be good if the chart could be updated regularly, perhaps as a new page on "Ratesetter Info"
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