Author Topic: Ratesetter (P2P lending)  (Read 17145 times)

AliEli

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Re: Ratesetter (P2P lending)
« Reply #50 on: September 25, 2019, 08:04:32 AM »
From Ratesetter:

In November 2018, RateSetter shifted from charging borrowers an upfront risk fee (Risk Assurance Charge) to a risk fee that is captured over the lifetime of a borrower’s loan (Risk Assurance Rate). Because of this change, the Provision Fund buffer is now made up of cash held in the Provision Fund as well as future cash inflows that are due from borrowers over the lifetime of their loans, see image below.

While the current Provision fund cash balance may appear to be decreasing as a member of Financial Independence Retire Early rightly pointed out, the 'Expected Provision Fund inflows' is growing (currently ~$4.8m). A good way of measuring the Provision Fund's overall ability to meet future borrower missed payments is to look at the 'Provision Fund buffer' or alternatively the ‘Current estimated default coverage ratio’ both of which have remained steady over the last year.

The Provision Fund typically protects investors when the Current estimated default coverage ratio is greater than 1x. Given that the Current estimated default coverage is above 1.5x, we expect the Provision Fund to maintain its unblemished record of protecting investors against borrower late payments or defaults.

So ratesetter is charging an extra fee, but is that going to be passed on lenders?

mjr

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Re: Ratesetter (P2P lending)
« Reply #51 on: September 25, 2019, 02:14:23 PM »
They said that it has changed from an up-front fee to a rate throughout the life of the loan.

Although light on detail, it's not described as an extra fee, merely a change as to how they fund the provision fund.

marty998

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Re: Ratesetter (P2P lending)
« Reply #52 on: September 25, 2019, 03:11:41 PM »
From Ratesetter:

In November 2018, RateSetter shifted from charging borrowers an upfront risk fee (Risk Assurance Charge) to a risk fee that is captured over the lifetime of a borrower’s loan (Risk Assurance Rate). Because of this change, the Provision Fund buffer is now made up of cash held in the Provision Fund as well as future cash inflows that are due from borrowers over the lifetime of their loans, see image below.

While the current Provision fund cash balance may appear to be decreasing as a member of Financial Independence Retire Early rightly pointed out, the 'Expected Provision Fund inflows' is growing (currently ~$4.8m). A good way of measuring the Provision Fund's overall ability to meet future borrower missed payments is to look at the 'Provision Fund buffer' or alternatively the ‘Current estimated default coverage ratio’ both of which have remained steady over the last year.

The Provision Fund typically protects investors when the Current estimated default coverage ratio is greater than 1x. Given that the Current estimated default coverage is above 1.5x, we expect the Provision Fund to maintain its unblemished record of protecting investors against borrower late payments or defaults.

So ratesetter is charging an extra fee, but is that going to be passed on lenders?

Not that I have ever been a borrower but I understand borrowers pay a much higher rate than what the lender selects, but the lender only ever gets the specified rate they want.

For example, The lender might charge 5%. Then 0.5% is added for Ratesetter's interest margin, then a couple of % is added for funding the provision fund, then you have fees and charges added on top. The final all in "rate" might be well north of 10-13% depending on the amount you borrow, but the lender only gets the 5%.

mjr

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Re: Ratesetter (P2P lending)
« Reply #53 on: September 25, 2019, 03:51:47 PM »
From another forum (not by me):

" I wanted to borrow $10k a few years back and they wanted to charge me $1300 even though I had no debt and have a combined income of $150k. Doing the calculations, the low interest rate of 9%, compared to banks which were offering 13%, quickly became about 20% after accounting for the fee. I declined. They either gouge customers who don't pay attention to all costs involved, or they lose them for stupidly high fees. Not a great model for a society waking up to their finances. "

marty998

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Re: Ratesetter (P2P lending)
« Reply #54 on: October 09, 2019, 03:27:31 PM »
Amazing that the 3yr rate is down at 2.7% and the one month rate at 3.8% today.

AliEli

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Re: Ratesetter (P2P lending)
« Reply #55 on: October 10, 2019, 04:29:58 AM »
2.7%??!?!?!

I had another early payout today.

Is there much data about P2P lending and the general health of the economy?

marty998

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Re: Ratesetter (P2P lending)
« Reply #56 on: October 10, 2019, 02:28:31 PM »
2.7%??!?!?!

I had another early payout today.

Is there much data about P2P lending and the general health of the economy?

Crazy isn't it? 2.7% for 3 years for what are largely unsecured personal loans that banks charge 9-11% for. Ask yourself why banks need to charge that much, and still do even in the face of competition from Ratesetter.

AliEli

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Re: Ratesetter (P2P lending)
« Reply #57 on: October 10, 2019, 10:08:36 PM »
2.7%??!?!?!

I had another early payout today.

Is there much data about P2P lending and the general health of the economy?

Crazy isn't it? 2.7% for 3 years for what are largely unsecured personal loans that banks charge 9-11% for. Ask yourself why banks need to charge that much, and still do even in the face of competition from Ratesetter.

Wow. That's so true. What's the health of the company like? I've not been keeping up with all of the information they send me (I've got young kids, I don't have a lot of time to sit and think). I should probably sit down and see what's in their new pds and investor letter.

marty998

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Re: Ratesetter (P2P lending)
« Reply #58 on: October 11, 2019, 01:03:14 AM »
2.7%??!?!?!

I had another early payout today.

Is there much data about P2P lending and the general health of the economy?

Crazy isn't it? 2.7% for 3 years for what are largely unsecured personal loans that banks charge 9-11% for. Ask yourself why banks need to charge that much, and still do even in the face of competition from Ratesetter.

Wow. That's so true. What's the health of the company like? I've not been keeping up with all of the information they send me (I've got young kids, I don't have a lot of time to sit and think). I should probably sit down and see what's in their new pds and investor letter.

Ratesetter is backed by a number of venture capitalists. From time to time they'll inject more capital (I don't think it the Company itself is profitable just yet).

I was more hinting at the stupidity of lenders (i.e. Joe Public) willing to lend at such low rates.

Regarding how it performs in a downturn.... I'm guessing it won't be great but there isn't a track record in this country to go by.

AliEli

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Re: Ratesetter (P2P lending)
« Reply #59 on: October 11, 2019, 07:43:11 AM »
I don't have a lot of money in it, it's really just some money to see how it goes over the long term. I just looked at the 3 year rates and orders, and it's strange - there are 1236 orders at 2.7% totalling $176k, and the rest have an even spread (between 1 and 400 orders at other rates). It's such an outlier, I wonder whether there is something going on, or whether it's coincidence.

marty998

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Re: Ratesetter (P2P lending)
« Reply #60 on: October 11, 2019, 05:54:24 PM »
I don't have a lot of money in it, it's really just some money to see how it goes over the long term. I just looked at the 3 year rates and orders, and it's strange - there are 1236 orders at 2.7% totalling $176k, and the rest have an even spread (between 1 and 400 orders at other rates). It's such an outlier, I wonder whether there is something going on, or whether it's coincidence.

The's an option you can select to "automatically reinvest" any money in your holding account. It places that at the lowest rate, hence the large number of small offers. Lots of people are obviously not thinking about it too hard....

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Re: Ratesetter (P2P lending)
« Reply #61 on: November 09, 2019, 07:58:14 PM »
Anyone going to one of ratesetter's events this month? As much as I'd love the opportunity, it doesn't fit in my schedule this year, which is a real shame, but hoping someone else could go ask uncomfortable questions and report back.

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Re: Ratesetter (P2P lending)
« Reply #62 on: November 13, 2019, 01:44:09 PM »
I think anything that is open to the public to bid (e.g. Uber, Airtasker, this) is just going to turn into a race to the bottom very quickly. I think you'd be better off investing in bank shares than accepting low rates for unsecured debts.

Perhaps if lenders (individuals) were smart enough to form a loose cartel and keep rates high that would be okay, but it seems a lot of people are providing ultra-competitive rates which then defeats the purpose.

marty998

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Re: Ratesetter (P2P lending)
« Reply #63 on: November 14, 2019, 12:02:17 AM »
I think anything that is open to the public to bid (e.g. Uber, Airtasker, this) is just going to turn into a race to the bottom very quickly. I think you'd be better off investing in bank shares than accepting low rates for unsecured debts.

Perhaps if lenders (individuals) were smart enough to form a loose cartel and keep rates high that would be okay, but it seems a lot of people are providing ultra-competitive rates which then defeats the purpose.

You're absolutely right.

Everyone has a different required rate of return. My lower limit I'm willing to accept is now 4% above my offset account rate of return (which is around 8%). An SMSF investor whose alternative is bank interest at 1.25% may be willing to accept 3%. They will get their loans funded and I won't.

It's a variation of the prisoners dilemma type situation. All lenders win by a larger degree if they do not act entirely selfishly.

AliEli

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Re: Ratesetter (P2P lending)
« Reply #64 on: December 09, 2019, 09:27:35 PM »
National Clean Energy fund is up to 8.7%... what's going on?

Does anyone know more about this?

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Re: Ratesetter (P2P lending)
« Reply #65 on: December 10, 2019, 12:45:17 AM »
Clean energy finance corp must have run out of money, lol. I've chucked some in at 15.9% yesterday, couldn't resist. Hoping it stays on loan longer than a few days.

AliEli

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Re: Ratesetter (P2P lending)
« Reply #66 on: December 10, 2019, 05:14:20 AM »
Clean energy finance corp must have run out of money, lol. I've chucked some in at 15.9% yesterday, couldn't resist. Hoping it stays on loan longer than a few days.

I had that thought - there seems to be an increasing uptake of large scale renewable projects recently. I was just surprised that it shot up so much! I've had money waiting to be loaned in the low 6% for weeks, then it all went yesterday in a short space of time. I wonder if it is a short burst of volatility... will have to wait and see!

marty998

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Re: Ratesetter (P2P lending)
« Reply #67 on: December 21, 2019, 02:43:11 AM »
Maybe the worker bee at the CEFC went on holiday and forgot to leave a couple of million on offer while they were away....

marty998

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Re: Ratesetter (P2P lending)
« Reply #68 on: March 12, 2020, 06:55:29 AM »
Managed to write a $28 loan in the 1 month market @ 20% interest LOL. Just wish I had more in my holding account haha.

Entire supply stack was taken out in the daily refinancing this morning and there was still $180k in need of lenders to replace the previous months loans that had matured. A few lenders who snapped that up got very lucky indeed.

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Re: Ratesetter (P2P lending)
« Reply #69 on: March 15, 2020, 04:46:53 AM »
So I got two offers in my inbox today from Ratesetter, I feel like they are quite desperate for investors. Given low rates from traditional lenders, it seems unlikely that there would be increased demand from borrowers, so do you think it's safe to assume that people are panic withdrawing at pretty high levels? I have low tolerance for risk in some other areas but I don't mind this risk at all for some reason - I quite happily reinvested a wodge today.

marty998

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Re: Ratesetter (P2P lending)
« Reply #70 on: May 09, 2020, 01:55:12 AM »
Lenders are running away quite quickly. There's been quite a bit of disruption in the 1 month lending market, with not enough lenders available each day to "refinance" the existing loans.

By my calcs the supply has been cut in half. To the point where your 1 month loan is being carried over for a second month before you get your money back. And that timeframe is lengthening each day. Not what most lenders have signed up for but is what it is.

I placed a loan of $100k back in March @7.7% for one month... (to be repaid in mid April). I'm now expecting the funds back in 2 weeks time. The expectation was I could do this as a very short term thing while waiting for my new property purchase to settle (scheduled for next Wednesday).

Had I placed $200k I might not have been able to settle the property. Thanking my lucky stars for that decision not to be greedy.

I'd expect more cash to flow out over the next month. Ratesetter have all but stopped writing loans too, their total loan book has shrunk from $300m to $291m in a month.

I guess it's a good thing they are deciding not to approve new borrowers at this time when lenders are running away.

mjr

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Re: Ratesetter (P2P lending)
« Reply #71 on: May 09, 2020, 02:24:51 PM »
I read your Ratesetter posts with interest, Marty

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Re: Ratesetter (P2P lending)
« Reply #72 on: May 12, 2020, 10:54:34 AM »
i managed to chuck a few thousand at 20% back in March and it was repaid today (sadface)

loan volumes have roughly halved, green loans underwritten by Clean Finance Co keep flowing which is good news for the provision fund, it's still getting topped up.

Problem is they stopped updating the provision fund data in real time, and it's a big red flag i reckon. Keen to see the dynamics of how it will fair in the next couple of months, that's if they keep updating the numbers and if the numbers are actually trustworthy.

marty998

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Re: Ratesetter (P2P lending)
« Reply #73 on: May 12, 2020, 04:36:05 PM »
The provision fund gets topped up by all borrowers on every repayment now (it's not all charged upfront, they changed it a few years ago?)

They used to update that provision fund at the end of each month (it was never done in real time). I too am annoyed the latest figures are at 14 April.

I have $83,000 that "entered the access queue on 16 April". So it is looking like next week that that money will come back... the delay is about to stretch out more than a month now, which means the amount of supply has dropped by more than half.

In the UK, they have halved the interest rate lenders receive and used the funds to top up the provision fund. This is to ensure lenders continue to receive a guaranteed positive return each month (no matter how small the positive is).

Half expect them to do it here soon too.

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Re: Ratesetter (P2P lending)
« Reply #74 on: May 13, 2020, 05:08:51 AM »
The provision fund gets topped up by all borrowers on every repayment now (it's not all charged upfront, they changed it a few years ago?)

That's right, that was actually the catalyst for me to start withdrawing the funds as my long term loans were getting repaid. Some of those returned funds though ended up in 1 month market when the rates were attractive (as in above 4 pct). After a mild shock at end of March when several loans were not repaid on time i hit a pause for couple of weeks, but then started using 1 month market again, i reckon rates of 8 to 9 pct are fairly attractive and not going to last long. There are days when there is an influx of money on the platform, even the 5 year market was open for early access on Monday this week, not for long though.

In the UK, they have halved the interest rate lenders receive and used the funds to top up the provision fund. This is to ensure lenders continue to receive a guaranteed positive return each month (no matter how small the positive is).

Half expect them to do it here soon too.

i'm keen to hear more on this if you have more detail? and whether they can legally do that for existing loans as the lenders' contracts have a fixed interest rate?

but then, havent they effectively already done that with the last PDS by limiting the highest rate to 9 pct across all markets?

marty998

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Re: Ratesetter (P2P lending)
« Reply #75 on: May 13, 2020, 05:24:17 AM »
The provision fund gets topped up by all borrowers on every repayment now (it's not all charged upfront, they changed it a few years ago?)

That's right, that was actually the catalyst for me to start withdrawing the funds as my long term loans were getting repaid. Some of those returned funds though ended up in 1 month market when the rates were attractive (as in above 4 pct). After a mild shock at end of March when several loans were not repaid on time i hit a pause for couple of weeks, but then started using 1 month market again, i reckon rates of 8 to 9 pct are fairly attractive and not going to last long. There are days when there is an influx of money on the platform, even the 5 year market was open for early access on Monday this week, not for long though.

In the UK, they have halved the interest rate lenders receive and used the funds to top up the provision fund. This is to ensure lenders continue to receive a guaranteed positive return each month (no matter how small the positive is).

Half expect them to do it here soon too.

i'm keen to hear more on this if you have more detail? and whether they can legally do that for existing loans as the lenders' contracts have a fixed interest rate?

but then, havent they effectively already done that with the last PDS by limiting the highest rate to 9 pct across all markets?

Details are on the Ratesetter UK website, I didn't read too far into it, but the policy will be in place until the start of 2021. The provision fund had dropped to a level well below the expected and experienced bad debt rate.

The rationale is that since lenders don't get to choose the borrower, it's not fair for one lender to feel the pain when a borrower defaults and the provision fund can't reimburse. So all lenders will share the pain in some way by way of a reduction in interest.

You can call it unfair if you like, but there aren't that many better options available to the platform to uphold the marketing guarantee of no dollar of capital lost.

marty998

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Re: Ratesetter (P2P lending)
« Reply #76 on: May 13, 2020, 05:28:46 AM »
On the 9% limit.... it's basically to try and not scare the borrowers because they end up paying pay day lender rates above that.

At 9%....It starts at 9% for the lender, then add the margin that Ratesetter takes (10% of the rate), then add provision fund charges, then add Ratesetter fees as well and you you could get something approaching credit card interest rates.

Your average one year borrower who is subject to the vagaries of the one-month lending market knew they were signing up for a variable rate loan, but probably wouldn't expect their rate to jump from 10% to 20% from one month to the next.

It's not great for the brand when that happens.

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Re: Ratesetter (P2P lending)
« Reply #77 on: May 13, 2020, 06:38:20 AM »


You can call it unfair if you like, but there aren't that many better options available to the platform to uphold the marketing guarantee of no dollar of capital lost.

aha, that's what it is!

https://www.ratesetter.com/blog/sp_announcement

https://www.ratesetter.com/stabilisation-period

the above two links is what ratesetter uk is doing in case anyone else is interested.

i'll be looking out for the next update on our local ratesetter's provision fund, assuming they keep the figures genuine, will be interesting to deduce the impact of the recent events

marty998

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Re: Ratesetter (P2P lending)
« Reply #78 on: May 18, 2020, 06:51:22 PM »
Have pulled out substantially all of my one month loans that finally got refinanced a month late.

Just have $2,500 that will clear on Thursday, and then $6000 remaining in 3 and 5 year loans that I’m happy to leave alone.

Feel better now.

The  provision fund has been updated as of 14 May, however whilst the fund balance has gone up (wow), the estimated bad debt and defaults have gone up more.

Fund coverage ratio is now 1.2x, but there doesn’t seem to be enough to cover current bad debts and defaults at the present time.

Size of the loan book has dropped again to $288 million now.

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Re: Ratesetter (P2P lending)
« Reply #79 on: May 20, 2020, 12:47:34 AM »
Marty, are you dialing in for the webinar tomorrow? Might be a good idea to ask difficult questions and get the insight straight from the horses mouth. I'm keen, but have a conflicting work appointment, will likely only listen to the first 15 minutes.

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Re: Ratesetter (P2P lending)
« Reply #80 on: May 20, 2020, 03:53:03 AM »
I probably won't be able to, got a couple of work calls on at the same time.

Don't think it will be simple for people to ask questions if there's a hundred on the line. I did get a chance to speak to the CEO a couple of years ago. He's seems alright, but he's paid to put a positive spin on everything.

Back then everything was rosy so it was easy for him :)

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Re: Ratesetter (P2P lending)
« Reply #81 on: May 20, 2020, 06:37:03 PM »
Now certainly isn't the best time to jump into RateSetter, but stumbling across this thread has me interested in the whole thing after the COVID-19 situation ends.

It looks like they aren't taking new lenders (though it would have been awhile before I would invest with all the craziness going on right now).

Still, I am curious, do I need to be a UK citizen or use the pound in order to invest or can US Citizens invest in ratesetter?

marty998

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Re: Ratesetter (P2P lending)
« Reply #82 on: May 29, 2020, 04:55:11 PM »
Now certainly isn't the best time to jump into RateSetter, but stumbling across this thread has me interested in the whole thing after the COVID-19 situation ends.

It looks like they aren't taking new lenders (though it would have been awhile before I would invest with all the craziness going on right now).

Still, I am curious, do I need to be a UK citizen or use the pound in order to invest or can US Citizens invest in ratesetter?

They are most definitely taking lenders on the Australian platform. You would need to comply with your own tax rules (and be mindful of foreign exchange rate movements too).

Lending club is the equivalent over there? Although they seem to be in a rather awful lot of difficulty.

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Re: Ratesetter (P2P lending)
« Reply #83 on: July 09, 2020, 06:10:21 PM »
Anyone else changing their Ratesetter strategy in light of the new maximum rates to be applied on 14th July?

https://www.ratesetter.com.au/faster-simpler-investing/

Since the rates have declined over the last 2 years I have not been putting any new money into Ratesetter and simply reinvesting at market rates with averages over the last 12 months about 7% in 5-year market. This will more than likely push me to stop reinvesting and start slowly pulling the money out. 6.2% max doesn't feel like it is adequate compensation for the risk.

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Re: Ratesetter (P2P lending)
« Reply #84 on: July 09, 2020, 06:54:21 PM »
I saw that....and read through the blog post.

In the context of a shrinking lending book and a higher proportion of remaining loans being in arrears it make sense for Ratesetter to do something to attract higher quality borrowers.

It will irritate a lot of lenders but they seem to have no shortage of supply (I’ve been watching the number of new accounts set up the last few months, almost 2000 new lenders).

My money is still slowly being withdrawn about $150 a month. Lately I’ve been getting a few extra repayments... might  be due to people withdrawing Super to pay off debts.

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Re: Ratesetter (P2P lending)
« Reply #85 on: July 09, 2020, 08:39:36 PM »
I saw that....and read through the blog post.

In the context of a shrinking lending book and a higher proportion of remaining loans being in arrears it make sense for Ratesetter to do something to attract higher quality borrowers.

It will irritate a lot of lenders but they seem to have no shortage of supply (I’ve been watching the number of new accounts set up the last few months, almost 2000 new lenders).

My money is still slowly being withdrawn about $150 a month. Lately I’ve been getting a few extra repayments... might  be due to people withdrawing Super to pay off debts.

I've also noticed that I've been getting more extra repayments coming in, however I took the opposite (cycnical?) viewpoint that this was due to more people defaulting due to Covid-19 fallout and then the lender getting paid out from the provision fund.

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Re: Ratesetter (P2P lending)
« Reply #86 on: July 11, 2020, 04:34:32 AM »
Back to full withdrawal mode for me, it was good while it lasted

Loved this blurb in the email: "these changes will deliver important benefits for our investors" - they clearly forgot to put the sarcasm hashtag.

Have to say that overall they stopped delivering a consistent message, one hand talks about the marketplace and rates regulated purely by supply and demand; then suddenly the rates are set by the ratesetter themselves, talk about a fitting name!

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Re: Ratesetter (P2P lending)
« Reply #87 on: July 11, 2020, 03:55:08 PM »
The corporate double speak knows no bounds. Apparently it makes it simpler for us too?

But sometimes I wonder why a decision like this hasn’t happened sooner. When you add the Ratesetter 10% of interest margin, fees and provision fund charges, the rates the borrower pays are grossly uncompetitive with bank personal loans.

Perhaps the whole flaw is that lenders don’t really choose the risk they take on. At some point it needs to stop being called Peer to Peer and you’re simply just funding another financial institution?

marty998

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Re: Ratesetter (P2P lending)
« Reply #88 on: August 17, 2020, 03:28:37 AM »
Change of name to Plenti, and now an IPO on the cards.

Will be very interesting to see their own financials. Doubt they are making much by way of profits.

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Re: Ratesetter (P2P lending)
« Reply #89 on: August 17, 2020, 04:05:24 AM »
based on how they've treated their investors in the last few months, i'm not real keen to find out how they would treat retail shareholders

and the new name is rather weak in my opinion

alcon835

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Re: Ratesetter (P2P lending)
« Reply #90 on: August 17, 2020, 08:41:16 PM »
Where are you seeing the name change? I see the acquisition stuff, but nothing about the name change.

marty998

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Re: Ratesetter (P2P lending)
« Reply #91 on: August 17, 2020, 10:42:51 PM »
Where are you seeing the name change? I see the acquisition stuff, but nothing about the name change.

Login to your account. Pretty clear the name change ☺️

Also, see here attached:

nofriends

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Re: Ratesetter (P2P lending)
« Reply #92 on: August 23, 2020, 05:24:31 AM »
Some light reading for the night!
The spiel looks quite good so far, but they're still losing money... another 'growth' stock i wonder? But AFR has reported the broker offer was filled in less then a day, hmmm.

marty998

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Re: Ratesetter (P2P lending)
« Reply #93 on: August 23, 2020, 04:03:57 PM »
An IPO prospectus is the only time where companies have to air ALL their dirty laundry.

Table on page 89 with the average interest rate (including fees) charged to most borrowers is over 14%!

Lenders like us have been capped at 6.5%....

So there’s a blatant attempt by Plenti to dress up the 2021 forecast revenue numbers by expanding their net interest margins.