RATESETTER has cut interest rates on two out of its three new investment products.
The peer-to-peer lender launched its Access, Plus and Max accounts last month, offering target returns of three per cent, four per cent, and five per cent, respectively.
Withdrawals can be made from the Access account at any time with no fees; while Plus investors can release their capital at a cost of 30 days’ interest, and Max customers can withdraw cash with a release fee of 90 days’ interest.
It said at the time that the revamped product range would improve liquidity and stability for the platform’s investors, while also simplifying the investment process.
RateSetter has now said that as of 2 December, the interest rate on its Plus account will be reduced from four per cent to 3.5 per cent, while the rate on its Max product will be reduced from five per cent to four per cent.
There is no change to the interest rate for Access, which remains at three per cent.
“Stable interest rates are important so we don’t intend to change them often, but we also need to be responsive to make sure the interest rates continue to support our objective of delivering the most consistent returns and most liquid investment in P2P,” said chief investments officer Mario Lupori (pictured) in an email update to customers on Monday.
“While we understand that the interest rates for Plus and Max will be lower, we are confident that they deliver value to investors and are consistent with our aim to offer an investment that will always be more rewarding than traditional savings and cash ISAs.”
The new products base each account’s liquidity on RateSetter’s entire loan portfolio, rather than the liquidity of just one particular market, making it easier for all investors to withdraw cash at any time.
RateSetter also changed the way the rate of return is calculated. Under the previous system, product returns were based on a trailing average, but the new products have a market rate which is provided by the platform.
“This is for two reasons: firstly, it will mean market rates that are more predictable and secondly because it gives RateSetter the control to ensure the rates do not become uncompetitive for the low risk lending we target,” RateSetter said in September, when it first announced the product changes. “Any change to the going rate will be notified in advance in the monthly statement.”