RateSetter - Dealing with Impatient/Economic Illiterates

I assume some people on here use the RateSetter site to lend money. I saw the $75 offer a few months ago and did not take it. I have just opened an account in the last two weeks. I have had lots of money in savings accounts getting 3%, but its time to get a higher return.

Just wonder if anyone has been looking at the behaviour of the rates on offer for a reasonable amount of time.

Specifically, I put in orders to lend at 5Y for 9.3%. It was about 0.3% above the "going" rate when I submitted the order, but the amount of money below 9.3% was still relatively low.

I have been watching the market very closely. On Wednesday 21 June at 9.30pm, the market looked like (these are the actual values at each rate, not the cumulative values up to the rate)

Rate Lenders
9.1% $3000
9.2% $1200
9.3% $108 000
Greater than 9.3% $200 000

So there was only $4200 at rates less than 9.3%, and I was near the start of the 9.3% orders in terms of the time the orders were placed (I placed the order the week before). All up there was the $4200 at 9.1-9.2% ahead of me, and then about $8000 at 9.3% ahead of me. So a $13000 loan would likely have got me in the game.

That's the lay of the land Wednesday night.

I looked at it Thursday morning. Some economic illiterates have dumped cumulatively $200 000 more money between 9.0% and 9.2% (about $100 000 @ 9.0%, $70 000 @ 9.1% and 30 000 @ 9.2%). It did not come from lots of people. It came from a few people (obviously not thinking or having any previous knowledge of the market in the last week) just dumping.

I looked at the market yesterday. They (the borrowers) managed to push through > $200 000 of loans at the lower rates. You could see the $100 000 lender orders dumped at 9.0% , and then all the large borrower orders came in. Borrower orders of $16 000 at 8.9% and $60 000 at 8.8% (pulling the market further down).

Now if you go and look at the 5Y market now, there are clear blocks of money that remain.

Rate Lenders

8.9% $1000
9.0% $12 500
9.1% $18 800
9.2% $128 600
9.3% $161 100
Greater than 9.3% $180 000

The 9.3% people (including me) are all stuck there still waiting for our turn after getting to the front of the 9.3% line.

Lots of people are looking to cut in, or have got impatient waiting at 9.3%, and have moved to 9.2%

God, so annoying.

Here I am trying to play a nice well thought out game of poker, and then some impatient and obnoxious people come in an break it. Apparently people have never heard of slow playing. They could have got their money into loans without damaging the market price so much.

Related Stores

Plenti (Previously RateSetter)
Plenti (Previously RateSetter)


  • +28

    My bad, found some spare coins behind the couch I thought I'd better put it to good use. Really sorry for your inconvenience, I'll revised first step of my lending checklist now to say "have you checked with random12 from Ozbargain?". Have a good one and sorry again.

    Tio out

    • -21

      Nice trolling. I assume you probably do not even have an account. You are just shit stirring.

      I know that it did not come from lots of people putting a bit extra up. Some idiot or small group of idiots (probably people that opened the account that night) just saw the 9% and thought it was so great (without looking at the history) and just dumped money.

      • +8

        Well, I did genuinely wanted to make you feel better. I do have an account at RateSetter, and I cannot confirm or deny if my contracts jumped before yours, simply because I can't possibly know.

        I thought a sorry was what you were looking for so I acted on my impulse and offer it to you. It seems that didn't help, so for that, I'm sorry, again.

        • Well, you can confirm if they jumped before mine.

          If you put in orders < 9.3%, then they jumped before me.

        • +13

          @random12: Then looks like I did, hence my apology to your hurt feelings. And hence the revision to my checklist. What else would you want me to do to cheer you up.

          Just out of curiosity, would your last name happen to be Norman? Because that would explain a whole heaps of things.


    • +4

      Really laughed at this and all your comments - good show

  • +9

    That's the nature of the free market.

    There could be a run of impatient borrowers tomorrow. Look at what happened here: https://www.ozbargain.com.au/node/301192

    So what is the problem? Do you want a cartel?

    • -11

      No, but we should expose the identity of the people that are screwing around like this. (Maybe not the real in person identity, but at least the site identity, so we can know when stuff is dodgy)

      Also, I am convinced that manipulation likely happens on RateSetter. Like all the people that put in low lender orders a few points below the last matched rate.

      It wouldn't surprise me if someone looking to borrow $40 000 or whatever, would go in as a lender and chuck $10 orders at 0.2 or 0.3% below market just to get lender money at that rate. So they "lose" on the lender order (getting a lower rate than they otherwise would) but then they gain on the borrower order, getting a lower rate on their whole loan (however large it is).

      • I think your issue is with the inefficiency caused by the prominence of the advertisement of the last matched rate over the full market depth.

      • +1

        Expose the identity of people who are not trading to your liking, or trading 'irrationally' according to you? That's not how markets work.

        You will always have people acting 'irrationally', selling or buying large amounts and boosting or crashing the market instead of doing the smart thing and spreading out their orders. I think it has less to do with some mystery manipulator than people choosing a particular way to trade, even if it is sub optimal for your trades.

        • +1

          Yes, some person lent out 200k at 9%, he doesn't care about the OP's 10k sitting there at 9.3%.

      • @random12

        It wouldn't surprise me if someone looking to borrow $40 000 or whatever, would go in as a lender and chuck $10 orders at 0.2 or 0.3% below market just to get lender money at that rate. So they "lose" on the lender order (getting a lower rate than they otherwise would) but then they gain on the borrower order, getting a lower rate on their whole loan (however large it is).

        If this scenario is plausible, it would have already happened. It might every well did happened, just like when the price of Ether "glitched" from $300+ to $13+ on an exchange, and then recovered. But just like a flash dive in price of a commodity, the market will act quickly to iron out the dip

  • +5

    OP, would you mind telling me if you have other investments or different lines of business, just I in case I might accidentally set my persimon or fuel price lower than yours. I wouldn't want to step my bound.

    • if you sell milk at lower than $1 a litre you gonna get bikies breaking your front door down and they would be having stern words with you. (read as you gonna cop a crowbar to the knees)

  • +1

    OMG, just realised that if I offended you, OP, I must have been extremely rude to the others that was waiting to lend at >9.3%. Going by your post, I can only imagine how hugely furious those people would be. Gosh, I feel so bad now. Maybe I should stop invest in RateSetter altogether, seeing how all I do is upsetting other lenders.

    I must contacted RateSetters to see if I can send out a universal apology to every lenders had been under cut by me.

    Can't believe I'm such a horrible person.

    Tio out.

    • +3

      Shh. First few comments were genuine gold. Too heavy and it ruins it.

      • +5

        ok ok, I'm new at this.

  • +2

    Seems to me that you're upset at people for having different views or aims to yours. And you're calling them names.

    • +4

      Worse than that - he has gazumped all the people who have put up money at rates higher than 9.3%
      He should really be apologising to them.
      Screw all the poor bastards who are already paying the extortionate rates of up to 9.2% on their borrowings. They should be allowed to get cheaper credit because it would hurt random's feelings.

  • +1

    nature of the free market.
    you may have time to play the waiting game but why should i have to play the waiting game if i am able to offer lower and get a lender?
    i'm happy with the rate so why not.

  • +16

    Guys I put a sell order on my RIO Tinto shares for $100, they are currently $59.

    I can see in my Market Depth Chart some 'Impatient/Economic Illiterates' have put a sell @ $59.10, how dare they ruin my poker hand like this?

    Flips Table

    • -17

      Yeah, that's really comparable smart guy.

      No it's not. The rate was only a bit higher, and there was only $4000 in between.

      • +4

        Which makes you look even more like a knob for bitching about 0.1%.

        Congratulations…..you've outted yourself as a fool in public over $5.

        • -5

          Not entirely actually.

          If I change the order to 9.2%, I still need to wait until I get to the front of 9.2% line, when I am already at the front of the 9.3% line.

          Just really pissed. I saw it on Wednesday night. Was counting it down. Constantly logging in and seeing that I was getting to the front of 9.3% line, and then a bunch of tools have just put down a ton of money, when they could have waited just an extra day and forced the borrowers to accept the higher rate.

          Ohh no, how dare they wait one more day having money in a zero interest earning account. They (and me) could have got an extra 0.3% over 5 years.

        • -5


          Hopefully the economy goes to shit, they find out they have lent to defaults and there is not enough provision fund to save them.

        • +1


          They are investing their monies to their strategy, a bit like what you are doing. The Horror.

  • +15

    I expected to park outside my building today, but some illiterates have parked there before me! How dare they ruin my parking like this?

  • +8

    Gerry Harvey, I was selling all my Iphones at RRP, then Ebay came along with a 15% code and undercut me. Illiterates I tell thee…

  • +9

    I was going to go to the beach today as yesterday the forecast was set for sunny, but it's now cloudy. bloody illiterates.

  • +2

    RoboGuy… I was on to a killing at $400 Xiaomi robot vacuums but now Ebay / Shopping Square have undercut me before I could get my dodgy deal out from China and now I am up the creek without a paddle :( .. illiterates ruining it for me…

    Seriously ..drop 0.1%

  • +2

    "Here I am trying to play a nice well thought out game of poker, and then some impatient and obnoxious people come in an break it. Apparently people have never heard of slow playing. "

    Have you ever played poker at a casino? You'll soon realise that obnoxious and impatient people win quite a lot of the time, even if they make silly plays and 'don't play properly'.

  • OP not sure how long you have been investing for but this is the market.

    Retail investors get screwed. It's the new norm

    • +2

      not sure how long you have been investing for

      Based on the OP and their replies, I'd say no more than a few hours. Max.

  • If I don't get my loan lent out at 9.3%, the system is rigged.

    Rig the system back, lend at 9.2% then 9.1%, 9…8.9…8.8….it is the rational way.

  • +4

    OP calls others economic illiterates, has not heard of supply and demand. Someone came along with a big chunk of money and flooded the supply.

  • +5

    I'm afraid you are the economic illiterate when you dont know how supply and demand works.

    • +3

      illuminati confirmed

      • +5

        illiterati also confirmed

  • -1

    Assuming there is a substantially higher risk here than that of a high interest savings account at a bank … should invest in virtual currency and make 10% per week in some instances. Risky? Sure. But you've got limited guarantees anyway right?

  • And here's me thinking that all us Ozbargainers spend all our money on non-essential stuff before we have chance to save anything!

    What's the world coming to when we're talking about saving!

    • must have logged in to a different site for anyone thinking ozb is about saving money.

  • +1

    As a totally random comment, I previously worked on the same floor as rate setter.
    The shared kitchen was so filthy we brought all our stuff into our office and only used the sink to wash and bring back stuff immediately.
    I don't know how people can be as dirty as they (or at least a few people that worked there) were

    • Cool story bro.

  • +3

    I can only see one economically illiterate in this story.

    There appears to be a large supply at of funds at 9%.

    There seems to be a desire to borrow at 9%.

    You are trading above the equilibrium and lost out.

  • +1

    You sound too angry to be dealing. If you can't take the downs then try another investment strategy.
    Here's an option: http://www.ebay.com.au/itm/Popeye-Disney-Vintage-Plastic-Mou...

  • You have made some erroneous assumptions:
    1) you assumed no other investors would come into play, and that when the cheaper money was gone, your offer would be taken.
    2) you failed to follow your research and learn something about the rates history.

    For example, did you read this independent review where rates are shown to Feb 2017:

    3) that everyone will play the game like you - for higher returns. If everyone did as you have done, then rhe rates would spiral very quickly.
    A savvy investor wants their money out there earning interest the same day where possible, so they look at the rates and calculate what they need to offer to get it out there. They may have offered money at a lower rate than you, but they are already earning interest while you are still whining about it.

    Did you check the going rates out there as a borrower to see what tbe competition offer elsewhere (other options)?

    You need to be flexible and as long as you are above what it was earning before (after fees and tax), then you are winning. So you adjust to get your funds out earning interest. Lower interest rates can still be a gain over idle money such as yours is right now.

    Thank you though for alerting me to tbe fact that P2P is out there. I thought it was something that was on the way in, but not yet established.

  • +1

    The people who have their orders set on automatic reinvestment will have their repayments reinvested all at the same time. Often, you'll see a large chunk of orders appear when people get paid, some times daily.

  • +2

    Side topic: Looking at recent trend, we need a up/down vote button on forum topics as well.

  • Too many illiterates renting their rooms out at less than <$AU 1,000 a week and now I (yes you head it, ME ME ME) cannot rent my my room out at the price that I think it is worth. Don't these stupid people know economics, if all we landlords went around with truncheons making sure NOBODY undercuts us imagine the amount of money we would be rolling in.

    You can't beat the market mate. Come on down and join the rest of us.

  • -1

    This sounds like a feature story for ACA

  • Rule 1.
    Do not invest in items that can be easily attainable by the general masses with a significant controlling power because it will not follow a rational course of action
    The general mass "investor" usually has no idea whats going on and follows the tide and will scavenge for scrapings because they do not understand investing
    Best example is Brickx - bricks vary up to 20% in a month because of amateur investors making rash decisions

    • My investment advice is that 9.3% before tax on a 5Y loan which I'm guessing you can't touch for 5 years is pretty bad

      I'd offer 3 alternatives which are better
      Telstra shares are approx 7% fully franked
      Harvey norman are approx 8% fully franked
      Myr is approx 7% fully franked

      They are quite beaten because of the fear of amazon and tpg but any impact is at least 2 years away and will be much smaller than expected because they have time to prepare for the impact

      Plus you can sell out anytime after good news and make a windfall from just capital gain

      • You get paid principal and interest. So it's not like you can't touch it completely for the full term. You get it back over time. In 2.5years you will have half (well actually a bit less than half) of your principal returned. Your money is not locked in for the full time period, but you also only get interest on the amount outstanding.

        I went down to 9.2% with a small amount (while keeping 9.3% order) because I though I would never get a go. I finally managed to get through my whole order amount at 9.3% .

        God, it's hard pulling these damn borrowers up. Even when they are screwed and can see there is only $160k (as was the case on Wednesday) for 640k of supposed demand (pfft, I question that) at 4Y and 5Y. They just wait a few days, and then some noob gives them what they want at a lower rate.

        You should have seen it last night. There was a huge block of about $150k at 9.2% with nothing below it , and then there were cumulative borrower orders of $130k at rates of 8.9% and 9%. They think they can drag down the market. Bite the bullet and just accept the rate.

      • +2

        I'll refrain from calling any investment better, its just an alternative venue for your money and each will expect to correlate differently to one another.

        E.g You don't buy bonds because you think it'll give you higher returns than shares and property, it's suppose to service as a stabilizer as part of your portfolio investment.

        Peer to peer lending is an alternative investment and should be seen as one that achieves a different set of correlation than that of traditional products; its about managing potential fluctuation (risk) than achieving the highest return.

  • Wow this is painful.

    You have the amount of approved credit being far more than the amount of money on the market, and yet borrowers still manage to drag the rates down by at least 0.3%.

    Now I am actually starting to see why everyone undercuts, because its so bloody painful waiting around 3-4weeks to get an extra 0.2% or so.

    For the last 7 days, the amount of approved credit for 3Y has been around 400-500k. At the same time, the amount of money on market has been 200-300k (it has been 200k for most of the week). Yet, they still manage to push loans through at 7.8% for 3Y and 8.8% for 5Y (when historically 3Y is 8% and 5Y is 9%).

    The "Volume" data they give must be rubbish and misleading. Also, god knows why there is so much "pending" compared to "approved". For every $1 they have approved, $10 (or more) is pending. They are processing them slow (or they are misleading investors into believing there is far more demand than there really is).

    I guess it kind of makes sense. All these jerks are willing to wait to get a better rate. How many people really need the loan straight away.

    Still, they should penalise all the people that get approved and just wait around. There should be an approval fee (something they are charged for waiting around for example, and charged based on length of time they wait, because in financial economics terms, they have been given an option by waiting around, they should pay). Something to make them move.

    • I suggest you do some forward projection and see what 0.3% of your investment is and decide if it's worth bringing so much frustration and negativity into your life.