P2P Ratesetter Advice Please

Knapper

Hi folks Pretty sure many of you have used or are still using P2P Lenders like Ratesetter. I recently joined with the intention of putting some significant savings into it on a 1 yr basis. When I look at the site (and doubtless it's no different to any other P2P site), it shows me the current Market Rates for the various time periods. Currently it shows 4.3% for the 1yr market and 5.8% for the 5yr market. If I click to view the full market it shows all the different levels that lenders are positioned at.


These include offers at 6%, 7%, 8%, 9% and 110%.

What I can not understand is what all those high offer are there for. Surely those sitting at 10% have absolutely no chance at all of ever getting fulfilled by a borrower. Probably same for the 6%'s and upward. So what are they doing there? Are they real offers or have they been put there to artificially affect the market? Any ideas? How does one decide at what % to set the lending rate? Obviously setting it at the market rate will see it matched to a borrower pretty quickly, but I don't mind waiting a few days if that can get me a better rate, but surely if I set it at 7%, 8%, 9% ,10% there's never going to be a chance it will be matched. So what gives? Why do those lending offers exist at all? Cheers in advance

Harvic

The market rates change quite a lot in the day and at different times of the year. I'm sure some people have had loans at higher amounts (6% upwards), they just will wait longer.

I set up a 1-year fix in December, it didn't shift at 5.5% for a few days but sold within hours at 5.4%. Very much supply and demand market. At the time they were offering £100 cashback for 1-year loans of £1k upwards, which certainly helps!

Knapper

Appreciate the response Harvic.


Something else I noticed was that you're limited to 1yr or 5yrs. The Rolling Market is . . . well . . . rolling, instant, but comes with a major problem that the capital repayments made by the borrower are compulsorily re-invested by Ratesetter and matched to other loans which could be up to 5 yr loans. That seems somewhat unfair.


In other words you might use the Rolling Market for its ease of getting in and out quickly but if the capital repayments HAVE to be re-invested into new loans (by Ratesetter themselves) then I have no control over how long my money is getting tied up for. Reading up on it I noticed that they made a change to their Rolling Market last year but then back tracked on it when lots of investors complained or left. So I believe you can still set your own re-investment rates for those capital payments but not the length of time. Have I understood that right?

firestone

have tried explaining Ratesetter before as have others and i think most agree there's more work required to get the best rates then you might think(or take market rate and its easy)
There are a few threads on here but one of the best guides to using RS is on financialthing.com (or try the p2pindependentforum.com)
You also do not have to put your rolling repayments in 1 or 5 years as you mention they can go back in rolling at the rate you set or to your wallet for manual

Knapper

firestone wrote: »

You also do not have to put your rolling repayments in 1 or 5 years as you mention they can go back in rolling at the rate you set or to your wallet for manual

Definitely NOT what I have read on the RS site. the CAPITAL repayment element is ALWAYS reinvested by RS automatically and you can not opt out of that AFAIK.


The INTEREST element of the repayments, is new money and so you CAN opt for that to go into your holding account and do with it as you please.


For the CAPITAL element, yes I believe you can set the interest rate at which you would like it to be re-invested but you can't select the time period of the loans it is matched to. Hence your capital repayments could end up matched to 5yr loans.

PuzzledDave

For the rolling market it doesn't matter the term of the loan you are invested in - because you can get out of the rolling market in part or in full at any time as long as there are other investors to take your place.

Only caveat is that you cannot reinvest in rolling for 2 weeks if you pull out.

firestone

Knapper wrote: »

Definitely NOT what I have read on the RS site. the CAPITAL repayment element is ALWAYS reinvested by RS automatically and you can not opt out of that AFAIK.


The INTEREST element of the repayments, is new money and so you CAN opt for that to go into your holding account and do with it as you please.


For the CAPITAL element, yes I believe you can set the interest rate at which you would like it to be re-invested but you can't select the time period of the loans it is matched to. Hence your capital repayments could end up matched to 5yr loans.

Can only tell you how i can use it
if you have money invested in a market the reinvest tab on your account page should be working
when clicked you should see all the reinvestment options using the drop down arrows
such as capital or capital and interest in the market you desire and the chance to accept market rate or set you own
and using my One year repayments as an example i can then send my choice of payment to any of the 3 markets or holding account
you even have the choice of taking the interest as income and just reinvest the capital

Prism

You can auto reinvest into any of the 3 markets or leave it as cash in the holding account

Knapper

firestone wrote: »

Can only tell you how i can use it
if you have money invested in a market the reinvest tab on your account page should be working
when clicked you should see all the reinvestment options using the drop down arrows
such as capital or capital and interest in the market you desire and the chance to accept market rate or set you own
and using my One year repayments as an example i can then send my choice of payment to any of the 3 markets or holding account
you even have the choice of taking the interest as income and just reinvest the capital

Yep so I'm aware that you can choose to bring the interest part out if you so choose but the capital part HAS to be re-invested right? The options you stated there were to re-invest just Capital or both Capital and Interest, so either way the capital HAS to be re-invested. I also realise you can set the rate you wish to re-invest at. The bit that I had issue with was being able to specifically choose the market that the capital gets re-invested into. If you get to choose then that's fine. When I read RS comments on their site back when they were making changes to their system it sounded like you couldn't choose the market.

masonic

Capital does not have to be reinvested. I invest once in a blue moon, when rates are high enough, and at all other times repayments of capital and interest are returned to my holding account and periodically withdrawn.

Prism

Knapper wrote: »

Yep so I'm aware that you can choose to bring the interest part out if you so choose but the capital part HAS to be re-invested right? The options you stated there were to re-invest just Capital or both Capital and Interest, so either way the capital HAS to be re-invested. I also realise you can set the rate you wish to re-invest at. The bit that I had issue with was being able to specifically choose the market that the capital gets re-invested into. If you get to choose then that's fine. When I read RS comments on their site back when they were making changes to their system it sounded like you couldn't choose the market.

No it doesn't have to be reinvested and yes you can choose the market you want to reinvest in