Ratesetter Investing past Its Prime

Last year you get about 8% for 3Y and 9% for 5Y.

It has since absolutely tanked to 6% for 3Y and 7.5% for 5Y.

Also, the arrears statistics have gotten significantly worse as well with the generally worsening economic conditions, but dumb amateur investors continue to place lots of money at lower returns.

I haven't added any new loans in the last 12 months ( except a $180 repayment that I managed to reinvest at 12% for 5Y ). Other than that, I am just running off the loans and withdrawing everything as it gets repaid.

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Plenti (Previously RateSetter)
Plenti (Previously RateSetter)


  • +2

    Yeah I feel the same way about it.
    When I invested originally I got 8.7% on 3-year loans plus sign-up bonuses.
    The falling housing market may also mean an increase in defaults so I'd be wanting a higher nominal return now.
    Also I think Ratesetter is taking a bigger cut now than they were before, which would push down the returns.

  • +6

    When I read the opening line the first thing I thought of is this thread.


    Turns out its YOU AGAIN.

    • yup, and with the except of the small repayment that I managed to reinvest at 12%, I have not made any new loans (or even bothered transferring money in to try new loans) since that post.

      18 months of just withdrawing.

      • +2

        Financial Illiterati - 287,337 : Random12 - 0

  • +1

    Welcome to market economics.
    More money available to borrowers - fewer borrowers who want that money.
    Something's got to give - and that thing is the rate. People are trying to make their money more attractive to borrowers.
    This is how it works. Isn't it great!?!

    • -1

      Well, no it's not exactly how it should work.

      Yes there should be some relation to supply/demand, but there should also be risk calculation as well.

      Right now, everyone views ratesetter as 'Risk Free' (even though RateSetter has definately put out their mandatory disclosures saying stuff like 'the provision fund may not always protect your investment'). So dumb lenders are more than happy to dump money at lower and lower rates.

      • +2

        Well, no it's not exactly how it should work.

        It's supply/demand. No point getting emotional over something that's operating just fine.

        Also UK ratesetter has always been lower, such as 6% for 5 year market. Where you think 8% is under rate, some people think is over. http://ratesetter.co.uk/

      • there is a risk calculation involved, just that your appetite for risk is lower than others, hence their rate being lower than yours.

        everyone is in a different situation and although you may criticise or have opinions about their lending practices, these are just simply market dynamics working as intended.

  • I've been pulling out for the last couple years. My main reason is the tax is just insane. All interest treated as regular income so heavily taxed and can put people in a higher tax bracket.

    But yeah, I'm still letting my loans matched at 10% ride out. This was a better rate than people can get nowadays.

  • Also, I guess I should have asked this before getting a meaningful exposure to ratesetter, but I guessed they looked legit enough and it did not bother me.

    But can anyone explain the info under 'RateSetter Data -> Provision Fund'.

    Particularly the arrears percentages.

    It looks like for the 'Loan Up to Date' they do $187,292,579/$198,042,263 = 94.57%

    Why do they report the percentage of 'Up to 30 days late' as N/A , when it should be $193,347/$198,042,263 = 0.0976% = 0.10% (when rounded to 2 d.p.). I am guessing it may be because it is so close to 0%?

    And why do the percentages not add up to 100%?

    Those four categories should cover all the cases (unless they are trying to be tricky and say that 30 days is different from 1 month, but that still would account for the difference).

    $187,292,579 + $193,347 + $1,575,878 + $3,293,708 = 192 355 512

    Where is 198 042 263 - 192 355 512 = 5 686 751? I guess it's not current, but we don't know if its 0- 30days, 31 - 59days or 60days+ (And common terminology is to refer to a month as 30 days, regardless of actual day count).

    I emailed them about this before (actually back when I posted the previous thread referenced above) and they never responded with a good explanation


    Key Statistics Since Inception
    Claims on Provision Fund 100% of late payments and defaults
    Claims paid by Provision Fund 100% of total claim value
    Total amount lent $403,589,839
    Total principal repaid by borrowers $205,547,577
    Current funds on loan $198,042,263
    Current estimated bad debt rate* <3.8%
    Current estimated bad debt* $7,605,162
    Current estimated default coverage ratio* 1.5x

    Status Value % of total funds on loan
    Loan up to date information
    $187,292,579 94.57%
    Payment up to 30 days late information
    $193,347 N/A
    Loan 1 month in arrears information
    $1,575,878 0.80%
    Loan at least 2 months in arrears information
    $3,293,708 1.66%