Greenwood2
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Post by Greenwood2 on Jul 17, 2020 19:48:40 GMT
Pieces of the Jigsaw The RYI for access accounts only moved by 27 places this week, inc cancellations and repaid loans....yet 5 yr moved nearly 200 places..... The loan book is repaying at a rate of about £45m a month I estimate using RS figures ~50% of loan book is RYI queued and those people will presumably be withdrawing repayments as they come in. Which means ~£22m /month is available for RYI, whereas in the last month RS allocated ~£13m for this purpose.
I conclude: 1. RS are channelling about 50% of the funds returned from loan repayments to meeting RYI requests.
2. The other 50% is funding new lending. 3. Of the 50% that is going to meet RYI requests clearly most of it is not going to the access market. Most is going to the 1 & 5 yr markets. 4. The reason for that is obvious.... the effect of filling RYI in 1 & 5 yr markets while still lending into access, means that
a. RS lower their cost of borrowing by possibly 2-4% (the difference between current access and historic 5 yr rates) b. RS charge the 1.5% and 0.3% fee on the RYI for those markets.
As we all know, unless you are very near the front of the access markets queue...you're in for the ride so get comfy and God bless
How can that happen? If there are RYI requests that need to be paid according to the T&Cs. why are those funds not allocated automatically?
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chris1200
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Post by chris1200 on Jul 17, 2020 20:06:49 GMT
Pieces of the Jigsaw The RYI for access accounts only moved by 27 places this week, inc cancellations and repaid loans....yet 5 yr moved nearly 200 places..... The loan book is repaying at a rate of about £45m a month I estimate using RS figures ~50% of loan book is RYI queued and those people will presumably be withdrawing repayments as they come in. Which means ~£22m /month is available for RYI, whereas in the last month RS allocated ~£13m for this purpose.
I conclude: 1. RS are channelling about 50% of the funds returned from loan repayments to meeting RYI requests.
2. The other 50% is funding new lending. 3. Of the 50% that is going to meet RYI requests clearly most of it is not going to the access market. Most is going to the 1 & 5 yr markets. 4. The reason for that is obvious.... the effect of filling RYI in 1 & 5 yr markets while still lending into access, means that
a. RS lower their cost of borrowing by possibly 2-4% (the difference between current access and historic 5 yr rates) b. RS charge the 1.5% and 0.3% fee on the RYI for those markets.
As we all know, unless you are very near the front of the access markets queue...you're in for the ride so get comfy and God bless
There are *SO* many assumptions in this. - Where do you get your '27 places' inc cancellations for Access? This completely depends on where you are in the queue. A cursory glance at the tracker shows users that have moved around 60 places. - You "estimate using RS figures" how much of the loanbook total has been RYI'd? Which figures are these? There have been wildly different estimates on this forum. - You completely assume that those who haven't RYI'd will be re-investing all their repayments. I think that's a pretty spurious assumption. It also forgets that many investors may have made partial RYI requests and yet be withdrawing all repayments. - Why is it "clear" that "most of it is not going to the Access market" and that "most is going to the 1 & 5 year markets"? We don't know this at all. - You seem to be suggesting that RS are deliberately channeling funds into the 1 & 5 Year markets, at the expense of Access, but we've been told several times that each market is operating separately. To be honest, it makes sense to me that the 1 & 5 Year markets might be receiving more re-investment as many of those in the 1 & 5 year markets will be reinvesting at least some funds so as to maintain access to these markets, which would disappear otherwise (no such issue with Access). Nevertheless, it would be no great surprise if a substantial amount of re-investment was going towards new lending rather than fulfilling RYI requests. I thought we all knew this was happening, and it obviously makes sense as otherwise RS will shrink and shrink until they have no business left. If we want RS to stay afloat, we need them to keep lending.
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Post by Deleted on Jul 17, 2020 20:32:27 GMT
- Why is it "clear" that "most of it is not going to the Access market" and that "most is going to the 1 & 5 year markets"? We don't know this at all. Exactly. If our only basis for comparison is request numbers, then we effectively have little useful information at all. As I stated a few posts ago, my 5Y portfolio is 30% smaller than March just from amortization/early repayments. If my 5Y portfolio is representative, then the 5Y queue could be around 1/3 smaller than march EVEN IF THE REQUEST COUNT HAD NOT MOVED. In addition, the 5Y loan book will consist of a large number of investors (like myself) who were letting the loan book run down naturally for a couple of YEARS before submitting their 'Covid' RYI. My '5-Year' portfolio is more like a '2-Year' portfolio. So again, its is perfectly possible that many 5-Year RYIs are similar to mine - fragmented loan books a fraction of their initial size. Only RateSetter have this crucial information - the TOTAL queue size in monetary terms. Without this, we are just p!ssing in the wind.
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chris1200
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Post by chris1200 on Jul 17, 2020 20:42:00 GMT
Exactly. If our only basis for comparison is request numbers, then we effectively have little useful information at all. I cannot tell you how maddening it is to have been pointing this out over and over again for months. The most maddening part is the confidence with which these statements are made, with no hint of caution that they might have it wrong. And people wonder why I'm a little curt with some of my responses...
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wuzimu
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Post by wuzimu on Jul 17, 2020 23:00:13 GMT
Yep, all my pieces of the jigsaw are assumptions...and all the data you need to work out average RYI size and thereby total RYI value has been published by RS. I will eat my hat if I'm out by more than +/-10%.
NB the fact that access, 1 & 5 yr products operate as separate markets, has no bearing on RS prioritizing the latter over the former when deciding how much repaid loans go to RYI and in which queue. If you don't think they are,, respectfully that is your optimism biases getting the better of you in the face of compelling evidence.
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chris1200
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Post by chris1200 on Jul 17, 2020 23:22:23 GMT
NB the fact that access, 1 & 5 yr products operate as separate markets, has no bearing on RS prioritizing the latter over the former when deciding how much repaid loans go to RYI and in which queue. If you don't think they are,, respectfully that is your optimism biases getting the better of you in the face of compelling evidence. What is your ‘compelling evidence’?
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Jul 18, 2020 7:57:03 GMT
Yep, all my pieces of the jigsaw are assumptions...and all the data you need to work out average RYI size and thereby total RYI value has been published by RS. I will eat my hat if I'm out by more than +/-10%. NB the fact that access, 1 & 5 yr products operate as separate markets, has no bearing on RS prioritizing the latter over the former when deciding how much repaid loans go to RYI and in which queue. If you don't think they are,, respectfully that is your optimism biases getting the better of you in the face of compelling evidence. Please could you share or point me to where this evidence is presented?
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Post by diversifier on Jul 19, 2020 0:11:30 GMT
Pieces of the Jigsaw The RYI for access accounts only moved by 27 places this week, inc cancellations and repaid loans....yet 5 yr moved nearly 200 places..... The loan book is repaying at a rate of about £45m a month I estimate using RS figures ~50% of loan book is RYI queued and those people will presumably be withdrawing repayments as they come in. Which means ~£22m /month is available for RYI, whereas in the last month RS allocated ~£13m for this purpose.
I conclude: 1. RS are channelling about 50% of the funds returned from loan repayments to meeting RYI requests.
2. The other 50% is funding new lending. 3. Of the 50% that is going to meet RYI requests clearly most of it is not going to the access market. Most is going to the 1 & 5 yr markets. 4. The reason for that is obvious.... the effect of filling RYI in 1 & 5 yr markets while still lending into access, means that
a. RS lower their cost of borrowing by possibly 2-4% (the difference between current access and historic 5 yr rates) b. RS charge the 1.5% and 0.3% fee on the RYI for those markets.
As we all know, unless you are very near the front of the access markets queue...you're in for the ride so get comfy and God bless
There are *SO* many assumptions in this. - Where do you get your '27 places' inc cancellations for Access? This completely depends on where you are in the queue. A cursory glance at the tracker shows users that have moved around 60 places. - You "estimate using RS figures" how much of the loanbook total has been RYI'd? Which figures are these? There have been wildly different estimates on this forum. - You completely assume that those who haven't RYI'd will be re-investing all their repayments. I think that's a pretty spurious assumption. It also forgets that many investors may have made partial RYI requests and yet be withdrawing all repayments. - Why is it "clear" that "most of it is not going to the Access market" and that "most is going to the 1 & 5 year markets"? We don't know this at all. - You seem to be suggesting that RS are deliberately channeling funds into the 1 & 5 Year markets, at the expense of Access, but we've been told several times that each market is operating separately. To be honest, it makes sense to me that the 1 & 5 Year markets might be receiving more re-investment as many of those in the 1 & 5 year markets will be reinvesting at least some funds so as to maintain access to these markets, which would disappear otherwise (no such issue with Access). Nevertheless, it would be no great surprise if a substantial amount of re-investment was going towards new lending rather than fulfilling RYI requests. I thought we all knew this was happening, and it obviously makes sense as otherwise RS will shrink and shrink until they have no business left. If we want RS to stay afloat, we need them to keep lending. Well, since Rhydian gave an interview stating explicitly that RS had decided policy to allocate Re-investment 50/50 between new lending and RYI requests..... I’ve literally no idea why you’re jumping down wuzimu’s throat for calculating and coming up with the simple conclusion that RS published data agrees with that, almost precisely? I’ve done the same calculation and he’s right....Rhydian was telling the truth. So? ”Unwarranted assumptions”? No, it’s a perfectly good assumption for the majority of RS loanbook. Your alternative assumption is just.....wrong. True for 5yr, but self-evidently just bizarre for Access. You don’t see the difference that auto-reinvestment makes, and the requirement for daily sweeping. You are in fact correct that there is no reason to think that RS are deliberately channeling funds to 1yr and 5yr markets. I agree that it’s likely all above-board in that narrow sense. But honestly your arguments are so bad and strawmannish, that you seem to have just pre-decided and stopped bothering to think or do the arithmetic. Like....why exactly would “we want RS to stay afloat”. I mean yes, I don’t want them to sink, but neither do I want to subsidise them. That’s crazy talk. If all they were doing keeping lending was throwing good money after bad, and on a forced reinvestment basis, then no of course I don’t want that. If they can find borrowers where the risk-adjusted return is such the profit is positive to lend to them, then yes please do. How to identify risk-adjusted return.....errrrm how about...a secondary market with floating rate? Just a thought, crazy I know but it might work.
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chris1200
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Post by chris1200 on Jul 19, 2020 8:53:55 GMT
1) Well, since Rhydian gave an interview stating explicitly that RS had decided policy to allocate Re-investment 50/50 between new lending and RYI requests..... I’ve literally no idea why you’re jumping down wuzimu’s throat for calculating and coming up with the simple conclusion that RS published data agrees with that, almost precisely? I’ve done the same calculation and he’s right....Rhydian was telling the truth. So? 2) ”Unwarranted assumptions”? No, it’s a perfectly good assumption for the majority of RS loanbook. Your alternative assumption is just.....wrong. True for 5yr, but self-evidently just bizarre for Access. You don’t see the difference that auto-reinvestment makes, and the requirement for daily sweeping. 3) You are in fact correct that there is no reason to think that RS are deliberately channeling funds to 1yr and 5yr markets. I agree that it’s likely all above-board in that narrow sense. 4) But honestly your arguments are so bad and strawmannish, that you seem to have just pre-decided and stopped bothering to think or do the arithmetic. 5) Like....why exactly would “we want RS to stay afloat”. I mean yes, I don’t want them to sink, but neither do I want to subsidise them. That’s crazy talk. If all they were doing keeping lending was throwing good money after bad, and on a forced reinvestment basis, then no of course I don’t want that. If they can find borrowers where the risk-adjusted return is such the profit is positive to lend to them, then yes please do. How to identify risk-adjusted return.....errrrm how about...a secondary market with floating rate? Just a thought, crazy I know but it might work. This is... an odd post. Someone again getting very upset that I'm asking for a bit of accuracy... Have numbered my responses: 1) I'm confused. The end of my post agreed that this is what was happening. I quite clearly did not disagree with the conclusion - I pointed out the massive assumptions in the 'calculations'. The reason I did this was because they contained a host of mistaken assumptions about how this is all working and there are a number of new users (and existing users) on this forum who don't have a great understanding of RS and can be swayed by such things. It's important that we check such misinformation. 2) Weird to quote an expression I didn't use; may suggest you didn't exactly follow my post closely . Did you mean where I say that presuming that everyone who hasn't RYI'd is reinvesting all of their repayments is a spurious assumption? Are you genuinely arguing that I am 'wrong' to suggest that it's possible that some people who haven't RYI'd are withdrawing their repayments? You're saying this is 'self-evidently bizarre'? 3) Well my gosh, thank you for this brief bit of agreement. 4) Ah okay, we're back to the dissing. Which exactly is my 'argument' that is 'strawmannish'? There seems to be a bit of pot calling kettle black here as I'm not even sure what you're suggesting I've said is wrong. What is my straw-man? I dealt precisely with the points made in the previous post. 5) "Why exactly would “we want RS to stay afloat”. I mean yes, I don’t want them to sink" - you appear somewhat confused here! In this section, you have in fact created a supreme straw-man yourself, given that at no point did I suggest 'throwing good money after bad' or any kind of poor lending strategy; merely that they had to keep lending to survive. You seem to agree with this point, so I don't really know what you're debating here. To be honest, this seems like the post of someone else who just finds it annoying when I take someone's erroneous assumptions to pieces and wants to somehow fight back, but with zero substance. I can't find any actual substantial point in here that negates what I've said.
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aju
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Post by aju on Jul 19, 2020 9:49:28 GMT
Oops, run for cover, its not raining outside perhaps i'll do the lawn today ...
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Post by ruralres66 on Jul 19, 2020 10:05:22 GMT
As Frances de la Tour says in the 'History Boys' play by Alan Bennett, "Boys, boys......!"
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chris1200
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Post by chris1200 on Jul 19, 2020 10:12:29 GMT
No need for making this another school playground issue - I'm sure we're mature enough to keep to the facts without the "oooooh!"s from the crowd
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Post by diversifier on Jul 19, 2020 11:09:01 GMT
1) Well, since Rhydian gave an interview stating explicitly that RS had decided policy to allocate Re-investment 50/50 between new lending and RYI requests..... I’ve literally no idea why you’re jumping down wuzimu’s throat for calculating and coming up with the simple conclusion that RS published data agrees with that, almost precisely? I’ve done the same calculation and he’s right....Rhydian was telling the truth. So? 2) ”Unwarranted assumptions”? No, it’s a perfectly good assumption for the majority of RS loanbook. Your alternative assumption is just.....wrong. True for 5yr, but self-evidently just bizarre for Access. You don’t see the difference that auto-reinvestment makes, and the requirement for daily sweeping. 3) You are in fact correct that there is no reason to think that RS are deliberately channeling funds to 1yr and 5yr markets. I agree that it’s likely all above-board in that narrow sense. 4) But honestly your arguments are so bad and strawmannish, that you seem to have just pre-decided and stopped bothering to think or do the arithmetic. 5) Like....why exactly would “we want RS to stay afloat”. I mean yes, I don’t want them to sink, but neither do I want to subsidise them. That’s crazy talk. If all they were doing keeping lending was throwing good money after bad, and on a forced reinvestment basis, then no of course I don’t want that. If they can find borrowers where the risk-adjusted return is such the profit is positive to lend to them, then yes please do. How to identify risk-adjusted return.....errrrm how about...a secondary market with floating rate? Just a thought, crazy I know but it might work. This is... an odd post. Someone again getting very upset that I'm asking for a bit of accuracy... Have numbered my responses: 1) I'm confused. The end of my post agreed that this is what was happening. I quite clearly did not disagree with the conclusion - I pointed out the massive assumptions in the 'calculations'. The reason I did this was because they contained a host of mistaken assumptions about how this is all working and there are a number of new users (and existing users) on this forum who don't have a great understanding of RS and can be swayed by such things. It's important that we check such misinformation. 2) Weird to quote an expression I didn't use, but okay. Did you mean where I say that presuming that everyone who has RYI'd isn't reinvesting any of their repayments is a spurious assumption? If so, I don't really understand your point - are you not actually agreeing with me?? I'm saying potentially less re-investment could be happening than was suggested... 3) Well my gosh, thank you for this brief bit of agreement. 4) Ah okay, we're back to the dissing. Which exactly is my 'argument' that is 'strawmannish'? There seems to be a bit of pot calling kettle black here as I'm not even sure what you're suggesting I've said is wrong. 5) "Why exactly would “we want RS to stay afloat”. I mean yes, I don’t want them to sink" - you appear somewhat confused here. In this section, you have in fact created a supreme straw-man yourself, given that at no point did I suggest 'throwing good money after bad' or any kind of poor lending strategy; merely that they had to keep lending to survive. You seem to agree with this point, so I don't really know what you're debating here. To be honest, this seems like the post of someone else who is just finds it annoying when I take someone's erroneous assumptions to pieces and wants to somehow fight back, but with zero substance. I can't find any actual substantial point in here that negates what I've said. I responded sharply, because you tore into somebody for making specific claims about 50/50 split, and calculating RYI allocations, which are established facts. Without acknowledging the correct parts (1&2), you went straight for claiming “assumptions” and “spurious assumptions”, when in fact only 3 and 4 are challengeable. Pointing to one flaw to imply that adjacent true things are false, without explicitly saying so, is a strawman tactic. The (more obviously correct) response to wuzimu’s post would be: ”points 1&2 are true, but point 3 doesn’t follow from it. The reason why Access queue moves more slowly than 5yr is that a larger *fraction* of its holders seem to have requested RYI, and a smaller *fraction* of its holders are providing funds via reinvestment for that to happen. It’s possible that “most of the 50% [of funds] is not going to the Access market“ but the data don’t show either way. We can see from the Queued in Front data, that the 5yr people have comparatively very few queued in front. 5yr clearly only make up a small fraction of total RYIs, so only a very few 5yr requests need to be serviced to move that queue on by lots of RYI units. Even if it is true all that means is that most of the reinvestable funds are coming from 5yr account holders, and going to other 5yr account holders, with then most of the Access holders having reinvestment turned off.” There’s too many double negatives in *your* #2, which I’m losing track of. It might help to track individual statements to see which ones we are on which side of. I’m separating the cases into term accounts and Access, because that’s where I think our disagreement lies. My position is: 2a) Only some 5yr and 1yr Account holders who have switched off reinvestment, will have RYI’d Not Reinvesting represents only a one-click decision, and is perfectly rational. I’m in this section myself, as are many but not all on this forum. There isn’t any way that I know to separately calculate this fraction per account type. It could be a minority or a majority. And there are reasons for it to be quite different per account type. 2b) Almost 100% of those Access holders who are sweeping daily, have RYI’d [ I interpreted that you Implicitly disagreed with this, by not separating it from 5yr account case. I think it’s bizarre to imagine that anybody who has logged in on over a hundred separate occasions over four months, to sweep a tenner, would not have RYI’d by now] 2c) Conversely, many Access holders who have RYI’d are not necessarily sweeping daily. They may either not have figured out the trick, or not have the time or inclination to do so. [Probably uncontroversial] 2d) We can calculate quite precisely the fraction of cash not reinvested, totalled across all account types, using only RS published data (not even our own tracking spreadsheet) Using this figure to infer fraction of RYI cash, therefore *underestimates* the fraction of RYI cash, and therefore the length of RYI queue.
5) Yes, I agree RS have to keep lending to survive. But that in no shape or form implies that RS should indeed keep lending. If you don’t mean “irrespective of whether it is profitable, risk-adjusted”, then I don’t know what do you mean. “Risk adjusted” is for investors to decide what rate they will lend at. RS can’t just forcibly reinvest money just so it can survive. They picked 50% split because....well why not. But if RS decided to change that split to re-lend 90% with a six-month RYI queue, the contract would “allow” them to. But all that would happen is that the Access account holders (only) would take them to court on forced reinvestment, as they would have nothing left to lose. Account holders would win on the basis of Onerous Terms, the contract would be legally struck, the lawyers would make a lot of money, and everybody would lose out. Let’s not.
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aju
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Post by aju on Jul 19, 2020 11:10:40 GMT
No need for making this another school playground issue - I'm sure we're mature enough to keep to the facts without the "oooooh!"s from the crowd the facts! actually reminds of of a management training course I was on in the mid eighties where we had all decamped to a nice hotel and had some experts train us in the "Effective meetings". At one point one of my close colleagues, at the time where we were debating the benefits of some new fangled idea that had been broached recently, came up with the brilliant statement of "the facts are there are no facts!". That's not really the joke since it was only when we watching the after meeting review where the instructors had pieced together most of the salient points or mistakes and this statement was replayed on the videos. None of us so called managers had even been paying attention to the poor colleague as no one had noticed his comment in the meeting!. Just a thought. Edit: oops I was responding to chris1200 , 1 message back, that will teach me to make assumptions, I'll get back in the garden I think!
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chris1200
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Post by chris1200 on Jul 19, 2020 11:28:14 GMT
Hi diversifier - I think we're getting to a stage now where even my tired eyes don't want to read the length of these posts, and I think I said all I needed to say in my last post anyway (especially as I get the sense you're not actually disagreeing with me on much, so we may as well stop here). I wish everyone a lovely Sunday
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