RateSetter to Close 3-Year Product
RateSetter announced on Tuesday 2nd August that it will be pulling its 3 Year market product, currently offering 3.8% per annum lending to consumers, SME businesses and property borrowers. (*stats correct at time of publication).
When Will the Product Close?
5th October 2016 is the official date of closure.
Why is RateSetter Closing the Product?
RateSetter informed its investors via a blog release yesterday that the 3 Year market product has been less popular than other available products. Luke O’Mahony, PR Manager, explained:
"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."
Any Implications for Current 3 Year Investors?
Those who have their money tied up in a 3-year investment need not worry. Investors will continue to earn the same interest rate on that money as lending is repaid.
From 5th October, any borrower repayments made will be paid into an investor’s Holding Account by default. The investor then has the option of setting repayments to continue reinvesting in either the 1 Year or 5 Year market products – they can do this by selecting ‘Reinvestment’ in their account dashboard.
Early withdrawals will not be affected – regarding average 0.72% sell out fee – as the fee applies to the 1 Year, 3 Year and 5 Year market products alike.
Any Concerns for Prospective Investors?
Liquidity could be a concern, but if the 3 Year market product accounts for 5% of investments and RateSetter’s stellar record when it comes to early withdrawals continues: ‘To date no customer has ever had to wait for their money’ according to the P2P giant’s website.
Obviously investors will not be able to select a three-year term for their investment from October 5th. However, current RateSetter investors’ wallets suggest short-term and long-term investments are more favourable than mid-term investments.