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RateSetter to retire 3 year market
RateSetter have announced in their July statement email sent to lenders that they plan to retire the 3 year market from October. Unlike some of their competitors this is the first time that RateSetter has actually retired a market. It is likely some lenders will be disappointed with this decision, but it is understandable given that the 3 year market comprise less than 5% of new lending. Lenders still have the choice of 5 year, 1 year or the rolling monthly market with competitive rates.
Here are the details sent to lenders within their July statement:
After years of good service, today we are announcing the retirement of the 3 Year market from 5th October 2016.
When RateSetter launched in 2010, investors could choose between the Rolling and the 3 Year markets. Over time we added the 1 Year and 5 Year markets and made other adjustments so that our range now caters to three distinct investor needs:
- Rolling investment with no early withdrawal fees
- 1 Year investment (with early withdrawal fees)
- Longer term investment (with early withdrawal fees)
Today, we recognise that the 3 Year market has been superseded by the 5 Year market as the choice for investors seeking a longer term investment.
RateSetter go into more detail on the reasons behind closing the 3 year market on their blog:
Why are you closing the 3 Year market?
The 3 Year market has become less popular ever since we introduced the 5 Year market and now accounts for less than 5 per cent of new investments. Both markets repay capital and interest monthly but investors vote with their wallets and are telling us that they prefer to lend in the 5 Year market.
In light of this, we think it is sensible to simplify our offering and have three markets. Investors who are happy investing over a longer term can invest in the 5 Year market; those that prefer to invest for shorter periods or prefer to have cheaper access can invest in the 1 Year or Rolling markets.
What does this mean for investors?
From 5 October 2016 the 3 Year market will be closed to new investment.
What if I have money in the 3 Year market?
If you have existing investments in the 3 Year market, you will continue to earn the same rate of interest on that money as your lending is repaid.
From 5 October 2016, any borrower repayments which are set to reinvest into the 3 Year market will be paid into your Holding Account by default, so that you can choose how to invest them.
If you would like to keep earning interest on that money, you can of course set repayments to be automatically invested in the Rolling, 1 Year or 5 Year markets by logging in to your RateSetter account and then selecting “Reinvestment” on the left hand menu.