International P2P Lending Volumes April 2020

The table lists the loan originations of p2p lending marketplaces for last month. Mintos* leads ahead of Ratesetter* and Peerberry*. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Debitum Network*.

Milestones achieved:

  • Neofinance* crossed 50 million EUR loan volume since launch
  • MytripleA* crossed 100 million EUR loan originations since inception

The decline of loan originations due to the pandemic continues in April. Read my previous article ‘Hunger for Liquidity – State of P2P Lending in Times of the Coronavirus‘ for earlier observations on this. In reaction some marketplaces paused originating new loans either completely or in certain countries or credit grades.

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.


Table: P2P Lending Volumes in April 2020. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Links to the platforms listed in the table: Ablrate*, Archover*, Assetz Capital*, Bondora*, Bondster*, Bulkestate*, Colectual*, Credit.fr*, Crowdproperty*, Debitum Network*, Dofinance*, Estateguru*, Fellow Finance*, Finansowo*, Finbee*, Folk2Folk*, Geldvoorelkaar*, Growly*, Investly*, Iuvo Group*, Kameo*, Klear*, Landlordinvest*, Linked Finance*, Lenndy* Look&Fin*, Mintos*, MyTrippleA*, Neofinance* , October*, Peerberry*, Proplend*, Ratesetter*, Rebuilding Society*, Savy*, Smartika*, Soisy*, Sourced*, Swaper*, TFGcrowd*, ThinCats*, Twino*, Viainvest*, Viventor*, Zopa*.

Notice to p2p lending services not listed: Continue reading

Estateguru Launches Equity Crowdfunding Round on Seedrs to Raise 2M

Baltic property lending platform Estateguru* has just launched a round on Seedrs* to raise up to 2 million EUR in new funding at a pre-money valuation of 28.8M EUR . Estateguru was launched in Estonia 6 years ago and has since expanded into the Latvian, Lithuanian, Finnish, Portugeese and German markets. Using the platform 47,000 investors have funded over 1,400 loans with a volume of 202 million EUR for an average return of 11.8% (as per Estateguru statistics page). All loans are secured by mortgages. Estateguru says that so far all recoveries of defaults have returned 100% of the capital and just the length of discovery varied sometimes taking months, sometimes taking years.

Estateguru plans to use the raised capital to further develop the product, especially improving features for institutional investors. Estateguru* can build on the experiences it made in a two-year relationship with German Varengold bank which has provided a credit line to finance loans. A second goal is to expand into further markets. In a recent investor webinar CEO Marek Pärtel named UK as a potential market, stating Estateguru already holds the required licenses since last year. Furthermore Estateguru will implement integration with payment provider Lemonway.

Pärtel said in the webinar that Estateguru has doubled in size every year in the past and expects the fast growth to continue in the future.

How is my P2P Lending Portfolio at Plenti (Ratesetter Australia) Performing during the Current Crisis?

I started lending at Ratesetter Australia* in 2018. Read my article I wrote back then about my reasoning for selecting the platform and how I got started: ‘Up to 9% Interest Rate – How To Register as a Non-Resident Investor at Ratesetter Australia‘.

Some key figures on my lending since 2018:

  • amount deposited: 6,862 AUD
  • interest earned: 1,003 AUD
  • less interest margin fee: 88 AUD
  • less withholding tax: 88 AUD
  • less defaults: 0 AUD (as all loans are covered by the provision fund)

Unlike on other platforms, I did not stop my autoinvest at Ratesetter AUS when the crisis evolved. My main reasons were that the provision fund is quite reasonably filled (>10M AUD) and I did not want to change the funds back to EUR currently, so rather than withdrawing them and storing them in AUD cash without any interest I figured I could just continue to reinvest them.

I now reinvest only at the 1 month market as the interest rate there is frequently peaking at higher rates than on the 3 or 5 years market. The following screenshot shows the current allocation of my funds at Ratesetter.

ratesetter australia portfolio april 2020
click on image to enlarge screenshot

What measures did Ratetter take in reaction to the pandemic effects on the market

In early March market turmoil caused temporary spikes of interest rate matches up to 19.9%. This was mainly caused by less lender money than usual offered.
Starting on March 23rd, Ratesetter imposed a maximum ceiling of 9.0% for the lending rates on all markets. Older bids that were higher were cancelled.

In the following days investors mostly reallocated remaining funds on offer away from the longer term markets to the 1 month market.

On (or about) March 25th, the remaining funds on the 1 month rolling market must have fallen below the funds replacement buffer of 300K AUD, invoking section 7.7. of the product disclosure section, meaning paybacks on 1 month loans are not return to investors but rather reinvested at the previous rate. While it happend a few time to me since then, it is not really a problem (even so it is relent at pre-crisis interest rates of 3.5%), as I had very little funds on the 1 month market.

The following chart shows the turbulence starting mid-March, with rates bouncing up and down since then.

Overall the main impact on Ratesetter so far is the drop in new loan volume and the much higher interest rates on the monthly market. As far as I can tell repayments on the loans arrive regulary and if there is an impact on default rates it still lies in the future.

ratesetter rates april 2020
click on image to enlarge screenshot

Another big fallout of the crisis has been the forex impact. My home currency is EUR. Compared to that currency, the Australian dollar abruptly devalued in March. I even considered excahnging additional Euro to gain of the exchnage rate drap, but decided against it. The rate has moved back in the direction of pre-crisis levels since. As I have not withdrawn any money from Ratesetter the exchange rate fluctuations have not impacted me.


Source: XE

International P2P Lending Volumes March 2020

The table lists the loan originations of p2p lending marketplaces for last month. Mintos* leads ahead of Zopa and Ratesetter*. The total volume for the reported marketplaces in the table adds up to 397 million Euro, down 40% to the previous month. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Lenndy*.

Milestones achieved:

  • Mintos* crossed 5 billion EUR originated loan volume since inception

The effect of the current crisis is impacting nearly all marketplaces significantly in the second half of March. Read my previous article ‘Hunger for Liquidity – State of P2P Lending in Times of the Coronavirus‘ for further observations on this. To counter the effect the sinking volumes has on revenues of the marketplace company, Mintos* and Assetz Capital* announced the introduction of new fees for investors.

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

p2p lending march 2020 statistic
Table: P2P Lending Volumes in March 2020. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Links to the platforms listed in the table: Ablrate*, Archover*, Assetz Capital*, Bondora*, Bondster*, Bulkestate*, Colectual*, Credit.fr*, Crowdproperty*,  Dofinance*, Estateguru*, Fellow Finance*, Finansowo*, Finbee*, Folk2Folk*, Geldvoorelkaar*, Growly*, Investly*, Iuvo Group*, Kameo*, Klear*, Landlordinvest*, Linked Finance*, Lenndy* Look&Fin*, Mintos*, MyTrippleA*, Neofinance* , October*, Peerberry*, Proplend*, Ratesetter*, Rebuilding Society*, Savy*, Smartika*, Soisy*, Sourced*, Swaper*, TFGcrowd*, ThinCats*, Twino*, Viainvest*, Viventor*, Zopa*.

Notice to p2p lending services not listed: Continue reading

Hunger for Liquidity – State of P2P Lending in Times of the Coronavirus

Not only the stock markets, but also the p2p lending sector is heavily impacted by the current coronavirus situation. In this article I’ll try to give an overview of what’s currently the situation.

I watched the Mintos* live webinar on the current situation for the past 90 minutes. Some screenshots of the slides shown are at the end of this post. About 800-900 Mintos investors were watching and I think they highly appreciated the time and effort Mintos took to communicate. CEO Martins Sulte spent over 45 minutes answering questions. And there are a lot of questions investors have in times like these.

My take is, that the biggest trend we saw in p2p lending in the past week is the hunger for liquidity. Both on the investor side as on the loan originator side (on those marketplaces that work with loan originators).

105 German investors participated in a poll I ran over the past two days. Of these

  • 11% say they increase their p2p lending investment, to buy and profit from loans that are available at (large) discounts on secondary markets
  • 3% say they are increasing their p2p lending investment for other reasons
  • 30% reinvest as usual
  • 26% are withdrawing money as the want to reallocate it to the stock money
  • 20% are withdrawing money as they think the risk is too high

So even in this small, non-representative poll nearly half the investors are saying they are withdrawing money.

How that impacts the p2p lending marketplaces can be observed exemplarily on Mintos* :

  • loans on offer rose and still rise sharply both on the primary market (900,000 loans) and on the secondary market (1.7 million loans)
  • as many investors scramble to exit, this is only possible for them if they offer extreme discounts on the secondary market (the highest discount for current loans on offer is currently -20.1%, resulting in YTMs of 30% and higher for the buyer)
  • Congruously the Invest&Access product of Mintos got very illiquid. Withdrawals are very delayed and partial.
  • The volume of newly financed loans on the primary market has tanked
  • Interest rates offered on the primary market rise (current maximum 21.1%, Mintos even had to adapt the range the slider in the UI could show), together with cashbacks on offer and there are also measures to tie in capital longer.

In the current situation most investors in the discussion seem to assume that elevated risks come by the potential inability of borrowers to repay the loans, due to economic downturn. That may well be, but would impact the yield mid- or long-term (weeks or months).
In my view there are two very short-term risks that many investors overlook:

  1. The currency risks for many Mintos loan originators: Many have issued loans to borrowers in weak currencies like RUB, KZT or GEL, but need to pay Mintos investors in EUR. The sharp change in exchange rates could pose major problems for the liquidity of the loan originators.
  2. Many loan originators were growing fast and required constant cashflow to finance their lending and operations as they were not yet profitable. Some were even leveraged. External refinancing might be very hard to impossible to obtain in current market conditions (see for example investors reaction on trading of the Mogo Finance bond). And as said the volume financed on Mintos primary market is slowing. Again this could pose liquidity problems to originators.

An industry insider I spoke to said he would expect at least 2-3 loan originators to fail short term. CEO Sulte acknowledged in answering the questions on the webinar that “not all” could be expected to make it in the current situation, pointing to the large number of loan originators active on Mintos.

The two cited short term problems are especially a concern on those p2p lending market places that operate with loan originators. Of course the investors are also withdrawing increased amounts on “classic” p2p lending marketplaces like Assetz Capital, Bondora, Ratesetter and Zopa, but this poses no short-term risks to the stability of these marketplaces in my view.

Other investors share this opinion, pointing to the different levels of discounts on different secondary market (for current loans: Mintos* -20.1%, Viventor* -6%, Iuvo* -5.7%, Finbee* -5%, Savy* -5%, Neofinance* -5%, Bondora* -3%)

The platforms have reacted by four ways: communication, temporarily suspending borrower repayment requirement (especially SME loans, e.g. Linked Finance, October, Neofinance* ), and stepping up marketing and increasing interest rates:

  • Bondora* runs a raffle for investors which can win a BMW, minimum investment 1 EUR required.
  • Lendermarket* has increased interest rates from 12 to 14% and offers 2% cashback for any investment increase
  • Twino* has increased interest rates to 14%
  • Swaper* increased interest rates to 14% (16% for VIP customers, 5K minimum required)
  • Robocash* increased interest rates to 14%
  • Estateguru* interest rates have increased slightly

Below are screenshots of some of the slides shown in the Mintos webinar today:

mintos corona

mintos corona

mintos corona

mintos corona questions

Funding Circle Closes Offices in Berlin and Amsterdam

Funding Cirlce LogoFunding Circle today announced that it will close the offices in Amsterdam and Berlin laying off 125 employees. The German operations in future will focus purely on brokering loan request leads and will be managed from employees in London.

The announcement is not surprising as Funding Circle Germany failed to gain traction over the past years and struggled with default rates that exceeded expectations.

Funding Circle stock has gone down from over 440 pence at IPO to about 57 pence currently.