Unbeknown to many investors in the RateSetter platform, you don’t have to accept the immediately available quoted rates. In fact, you can theoretically obtain an interest up to 5.0% higher than the quoted rate.
RateSetter is named as such due to investor’s ability to set the interest rates they are willing to accept. However, it’s not immediately obvious how to do this and so accepting these lower rates is a common mistake made by many when first investing on RateSetter.
Step by step guide for changing interest rates on RateSetter
When you first log into your RateSetter account, you will see the immediately available rates for the Access, Plus and Max markets.
These are the set ‘expected rates’ offered by RateSetter. If you opt to invest at this rate, you will typically find that your money is matched to suitable borrowers within a very short period of time (perhaps minutes!).
If you click the Plus and then the arrow button you will be presented with the below pop-up screen.
If you choose the ‘going rate’ of 3.5%, your funds would likely very quickly be allocated at this lowest rate.
Instead, you can click the + button next to the ‘your rate’ box, to select a higher interest rate (theoretically, up to 5.0% over and above the going rate).
The breakdown on this pop-up is effectively saying that there is £715,000 on offer by lenders at the going rate, and £10,600 on offer by lenders at 3.6% (0.1 ppt higher than the going rate).
In 2018, RateSetter lent over £700 million via its platform, which averages out at £1.9 million per day. As such, it is possible that you can achieve a higher interest rate than the going rate (with no additional risk – you will be investing in the same underlying loans).
Looking at the market above and armed with the knowledge regarding lending volumes, you can make a personal judgement with regards to what rate to lend at. Don’t shoot too high as otherwise your funds will take a longer amount of time to be matched with borrowers and no interest income is generated on un-invested funds.