P2P Ratesetter Advice Please

Snow_Dog

Ratesetter recently experimented with stopping lenders from setting their own rate to lend at in the rolling market. It caused a lot of stink so they reverted back.


If you dont want your money to automatically reinvest then set your reinvest rate to be very high.


I tend to stick with the 1 year market as the money goes in and generally tends to run for the full year, sometimes loans get repaid but not so often to be a pain.


I like that market because the rates will drift up to 5.5-6.0 quite often and that is when i throw some ££ in, usually splitting it up into smaller chunks in 0.1% increments (to spread across different loans and to try to catch the peak - others may say thats a bad way and wont maximise return but its how i do it).


The rolling market rates tend to hover around 3-4% and to me that is just low enough to not be worth it.


5 year is too long for my taste for the usually <1% differential to the 1 year.


My default 1 year reinvest is set to 5.5%.


I think there is a pattern to rate rises and falls, think maybe thursday or friday evenings are possibly the best time.

Knapper

Ok thanks chaps. Just by way of explaining my worries it was this dialogue exchange where RS stated that Capital HAD to be reinvested, that worried me. This is however dialogue from last year when they were changing the Rolling Market for their "Fair Use" policy but which they subsequently back tracked on

Knapper

Snow_Dog wrote: »

If you dont want your money to automatically reinvest then set your reinvest rate to be very high.

Cheers yes that strategy did occur to me, makes sense.

Snow_Dog wrote: »

I tend to stick with the 1 year market . . .

I like that market because the rates will drift up to 5.5-6.0 quite often and that is when i throw some ££ in, usually splitting it up into smaller chunks in 0.1% increments (to spread across different loans and to try to catch the peak - others may say thats a bad way and wont maximise return but its how i do it).

Yep that's the main market I wanted to initially use. BrExit brings many uncertainties and I don't want to have tons of money locked into a 5yr market if things go belly up.

Snow_Dog wrote: »

The rolling market rates tend to hover around 3-4% and to me that is just low enough to not be worth it.

I tend to agree. You can just opt for a standard savings account and get 2-3% without the risk.

Snow_Dog wrote: »

My default 1 year reinvest is set to 5.5%.

Ok noted.

I'm still curious as to why the 1yr market has tons of lenders waiting at 10% down to 7%, 8% etc.


Just seems like no-one would ever borrow at such rates so why are they there? Just in case someone is desperate enough??!

firestone

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.

Think your there now about capital not having to be reinvested - But if you wish you can set the repayments capital or both to go to your holding account and then reinvest where you want if you don't want to use auto settings
Take note that 1 year can repay early at anytime so you may have to do One or the other

Joe_Bloggs

The OP (Knapper) Said:-

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.

Do not base the expected rate that you can get just upon a snapshot of the current market positions. These rates go up and down throughout the 24 hour cycle and fluctuate throughout the month.



I expect a surge of money in towards the end of the tax year as RS have an established IFISA.

J_B.

Knapper

Joe_Bloggs wrote: »

I expect a surge of money in towards the end of the tax year as RS have an established IFISA.

You mean a surge of Lenders? That would presumably create more lenders than borrowers which would push the interest rate down. So are you saying that it would be better to get lending money in now before that happens?

Snow_Dog

It happened last year, rates were rock bottom for quite a while.


As for why the 1 year market has ££ sitting at 10% - various reasons i figure, possibly maturing money where people used to be getting rates peaking at that amount so that is what they have their reinvest set at.


Also I guess the view maybe if you have to wait 2 months to lend money for a year at 10% is that better than lending it quickly at 5%. Probably not worth it in my opinion as i have seen people complaining that when they do get a 10% its repaid within a month or two.

Joe_Bloggs

Knapper Said:-

You mean a surge of Lenders? That would presumably create more lenders than borrowers which would push the interest rate down. So are you saying that it would be better to get lending money in now before that happens?

It is more likely to be an increase of funds from existing lenders, who think that they can throw money into a market with finite borrowers. If they want a prompt deal they will cut their interest rate offers.



I would say trickling money in on a regular basis will get you a better lending rate that flinging in 20K at the last minute close to a national financial deadline for financial investments.


In my view, the reason that some one year loan money is offered at 10% + is because the re-investment rate strategy was set to avoid reinvestment. Clearly the lender has no idea that they have missed the notification that the loan was repaid early or even repaid on time.
J_B.