International P2P Lending Volumes June 2017

The table lists the loan originations of p2p lending marketplaces in June. Funding Circle leads ahead of Zopa and Lendinvest. Assetz Capital makes a huge leap forward. The total volume for the reported platforms adds up to 530 million Euro. 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.

Milestones reached this month are:

  • Twino reaches 150 million EUR in origination since launch

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 statistic june 2017
Table: P2P Lending Volumes in June 2017. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.

Notice to p2p lending services not listed: Continue reading

Plum Automates Investment in Ratesetter – Plum Equity Crowdfunding Pitch

Plum is another fintech that makes use of Ratesetter’s products through a cooperation. Plum is bot on Facebook messenger designed to automate savings for the user and to invest money on his behalf. Savings can currently be invested in Ratesetters rolling market. Plum is currently pitching to raise 700K GBP through a convertible with a valuation cap of 5M GBP on Seedrs. Watch the video for more information on the Plum product and pitch. The minimum investment for this equity crowdfunding campaign is 10 GBP. The pitch is EIS eligible (UK residents). Other investors include 200K US$ invested by VC 500 Startups. This pitch is not yet officially launched on Seedrs, but already open for investments. You can use P2P-Banking’s free notification service to be alerted of upcoming Seedrs pitches early and review them ahead of the crowd.

Competitors of Plum include Digit, Qapital, Clarity, Albert, Squirrel, Cleo and Savedroid.

The Plum pitch deck is  informative reading. To request that, login, click on ‘Documents’ in the pitch, and send a message to request the pitch deck.

Another example of an innovative cooperative cooperation making use of products of a p2p lending service is Commuterclub.

This article is not an investment advice. Investing in startups bears significant risks, including total loss of investment.

Shift of Demand on UK Property Marketplaces

The market situation on UK property marketplaces for bridge loans with high interest rates has turned drastically in the past 2 months. For a long time before there has usually been much more investor demand than could be soaked up by loan demand. That the situation has changed is most visible on the loans on offer (mostly through the secondary markets). There is currently nearly 8 million GBP on offer on Lendy (that was close to nil 8 weeks ago). At Moneything there is 2 million GBP on offer and at Fundingsecure 0.6 million GBP. Collateral recently raised the interest rate for new loans from 12 to 14%.

So what is causing this change? I will look at possible causes and measures the marketplaces could take to react.

  • Have property prices peaked?
    Building activity and property prices are influenced by the economy. This Guardian article says UK house prices fell three month in a row. Should investors think, the economic climate is cooling down, they might be more cautious as loans to property developers would be affected in a downturn.
  • Defaults are rising on Lendy
    Loans that are more than 180 days overdue are categorized as default loans on Lendy. There are now 19 loans in default, with the total loan amount in these loans adding up to 23 million GBP. While this does not mean that money will be lost – the loans are secured by the property, it makes investors cautious and hesitant, asking more questions about valuations and collection procedures.
  • Lenders might fear that the assets become increasingly illiquid
    Part of the attraction of Lendy and Moneything in the past (aside from the high interest rate) came from the fact that loans could be sold very fast, usually within hours for most loans that were not overdue. That has changed on Lendy and might be currently changing on Moneything. However with the queues for sales building up on Lendy it is too easy to just look at the nearly 8 million GBP on offer and deduct that it takes very long to sell loans. Not all loans are equally liquid. I sold 400 GBP of DFL025 recently. Despite over 35,000 GBP in the queue before me, my part sold within 3 days.
    A major factor with the longer selling times is that on Lendy, investors forego interest while the loan part is on sale. On Moneything it continues to accrue interest while on sale.
  • UK investors are increasing their stake in tax sheltered IFISA products
    That is my favourite explanation. The shift in the above markets 2 months ago coincides with the launch of many IFISA offers on other UK marketplaces. Lendy, Monything and Collateral currently do not offer IFISAs. Check the database for best IFISA rates of other marketplaces. Fundingsecure has an IFISA. I am not currently investing on Fundingsecure, therefore I am not as closely monitoring the market developments on Fundingsecure as on Lendy or Moneything. But it seems that investor demand on Fundingsecure has not changed as much as on Lendy or Moneything. It is obvious that UK investors will prefer to invest in IFISA offers, at least until their yearly allowance of 20,000 GBP is reached.
  • Brexit and pound uncertainty pause international investors
    All of the above platforms are open for international investors. I currently run a survey among German speaking investors on my German p2p lending forum. 31% precent of respondents have already invested on UK marketplaces. But 5% want to reduce their level of investment because of the uncertainty of the pound development and for this reason 20% will not consider to start on UK marketplaces.

So what could marketplaces do and what measures are they already taking?

  • Attract more investors, increase marketing spend
    I believe this is already happening. Lendy revamped the referral program as of June 1st and Collateral announced it will launch one soon. Lendy will sponsor the ‘Lendy Cowes week’ sailing regatta. I have doubts this will be cost effective, but its hard to tell from the outside without access to hard figures. I know of other p2p lending platforms that sponsored golf events in the hope of targeting and attracting the right audience and discontinued that (for reasons unknown to me).
  • Launch an IFISA
    Actually I think this would most profoundly change the situation for Lendy. However for that Lendy first needs to get full FCA approval. Moneything has recently said it has put an IFISA higher on the priority list, but it is still not imminent but planned for later this year.
  • Find ‘different’ sources of capital
    This could be institutional money. Or a differently structed offer like the Lendy bond. But it is to early to tell how the Lendy bond is taken up.
  • Raise interest rates
    Collateral has taken this step. And Moneything offered 1 percent more on a very large loan. I don’t think Lendy will take this route as it recently moved from 12% interest for all loans to a broader range of 7 to 12% interest rates.
  • Change the model of the secondary market
    Lendy and Moneything currently have secondary operating at par value. The investor community seems split. While some applaud the simplicity and ease of use of this model, others argue to allow discounts (and possibly premiums). One argument for discounts and premiums is that it might better match demand and supply. Counterarguments are that p2p lending is not a high volume market and variable pricing would not be suitable and that premiums will attract traders. Also some feel that seeing discounts will furthermore undermine trust and deter new investors from signing up.
  • Show recovery results and better communication and transparency of collection efforts
    Obviously full recovery on defaults would be a most effective measure to increase confidence and trust of investors. However this will take time and I don’t think haste would do the results good. Therefore the only thing Lendy could do short-term is communicate more and in more detail.

What is your opinion, dear reader?

P.S.: On the continent at Estateguru with its 10-12.5% interest property loans there is no change of market conditions. Investor demand continues to outstrip loan supply.

Assetz Capital Launches Property Secured Investment Account

P2P Lending marketplace Assetz Capital today announced the launch of another account type. The Property Secured Investment Account (PSIA) is marketed as a way to invest exclusively in property backed loans with automatic diversification intended to help investors spread their risk across a diverse range of lending. Every single loan considered for this account is automatically selected or rejected upon the basis of the level of property security that it offers. The loans automatically selected for investment by this account are only those that have no expected loss in the case of that loan defaulting in the future, even after any estimated recovery costs.

The target rate for the Assetz PSIA account is 5.5%. (Interest is quoted gross at the target rate, although actual returns could be lower)

Assetz Capital Review – 30 Days Access Account with 4.75% Target Rate

Recently I opened an account at p2p lending marketplace Assetz Capital to gain some first hand experiences. Assetz Capital offers secured business loans to small and medium British SMEs. I decided to start with the 30 days access account as it is mostly hands off and deposited a tiny amount, which was credited within an hour. It currently offers a promotional target rate of 4.75% (instead of 4.25%) and allows to withdraw funds with 30 days notice in normal market conditions. Investors, who want to benefit from the promotional rate need to act now, as it is only applicable for deposits made until 11.59am on 6th June 2017 and is valid for a maximum of 90 days from the date of the deposit.

Assetz Capital has a minimum investment amount of 1 GBP. Assetz is open to international investors, but a UK bank account is required. If you do not have one, I suggest opening one at Transferwise. (UPDATE: but do check comment below this article, also see my Transferwise Borderless account article). All Assetz Capital (except the MLIA) investment accounts are protected by a provision fund. There are no fees for investors.

Assetz Capital says the 30 days access account is extremly popular with investors. Since the promotion offer was launched 7 weeks ago, 23 million GBP have been deposited in this account. Assetz also offers a quick access account with 3.75% target rate, designed to provide immediate access to cash, in normal market conditions, for investors. Currently 19 million GBP are invested in this account. Further account types are the ‘Great British Business Account’ (GBBA) with 7% target rate, the ‘Green Energy Income Account’ (GEIA) with 7% target rate and the ‘Manual Loan Investment Account’ (MLIA) with 5.5% to 18% gross rate. See comparison of Assetz accounts. Assetz also features a secondary market without fees providing liquidity.

International P2P Lending Volumes May 2017

The table lists the loan originations of p2p lending marketplaces in May. Funding Circle leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 500 million Euro. This is over 10% higher than the previous month and that despite the adverse effect of the pound taking a dive. 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 Paskoluklubas.

Milestones reached this month are:

  • Assetz Capital crosses 250 million GBP lent sinch launch
  • Lendinvest reaches 1 billion GBP in origination since launch

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 providers.

p2p lending volume May 2017
Table: P2P Lending Volumes in May 2017. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.

Notice to p2p lending services not listed: Continue reading

New Lendy Cashback Offer 50 GBP for New Customers

Lendy logoFor investors, that considered using the Lendy platform, but have not yet signed up, now may be a very good time to do so, as Lendy is offering 50 GBP cashback to investors that invest at least 1,000 GBP on the condition that this amount stays invested for at least 3 month. Lendy lists bidge loans secured by commercial property. The interest rates are typically in the range of 7% to 12% and the loan duration is typically 3 to 12 months. Currently a lot of loans are offered on Lendy’s secondary market, which will allow easy diversification into several loans upon signup.

I have been investing on Lendy for 2.5 years now (when I started it was still called Saving Stream) and I reviewed my Lendy portfolio only last month on the blog.

Lendy is open to international investors. While a UK account is not mandatory, I suggest opening a UK bank account online via Transferwise – this will make things easier, if multiple UK marketplaces are used (my article on Transferwise Borderless account).

To get the cashback, just register at Lendy via this link and start investing.

See more p2p lending cashback offers and subscribe to be notified when new cashback offers are listed.

Proplend IFISA Offer Launches Next Week

proplend logoProperty based p2p lending marketplace Proplend will launch its IFISA offer on May 30th at 9am. Initially the IFISA product will only be made available to those existing investors that had signed up to Proplend until May 26th. The new IFISA investors will have the same choice of loans secured by income producing UK commercial property and the same 1,000 GBP minimum investment opportunities as non-ISA investors. Depending on selected tranche, which differ by LTV, the interest rates range from 6.3% to 9.3%. The Proplend IF ISA will be flexible and allow tranfers in and out.

Since launching in 2014 Proplend has facilitated 11.7 million GBP in loans and has experienced no defaults so far.

There are currently 19 providers listed on the P2P-Banking IFISA comparison table.

Zopa To Retire Safeguard Fund

P2P lending marketplace Zopa announed the plan to roll out the new IF ISA from June 15th to existing customers with target rates of up to 6.1% and also that from December 2017 new lending will not be subject to the Safeguard Fund.

Investors in Zopa Core will lend in the same risk markets as Access and Classic (A*-C) but will not be covered by the Safeguard fund. Zopa Core will offer a higher target return of 3.9% after fees and expected credit losses, as compared to 3.7% and 2.9% for Classic and Access.

The Classic and Access product offers will no longer be available for new customers, but existing customers can continue to lend through these products until 1st December, when they will be retired.

The Innovative Finance ISA (IFISA) will be launched in four phases:
1. The first stage (from 15th June) will be focused on existing customers who want to open a new IFISA (limit of 20,000 GBP) and lend through Core and Plus.
2. The second stage (1st July 2017 to 31st July 2017) will enable existing customers to sell their current loans and re-purchase similar loans in an IFISA wrapper. This will allow investors to retain Safeguarded loans in the IFISA. Any investing through new lending, or relending as capital is returned, will be onto Plus or Core only.
3. The third stage (from August 2017, but dependent on meeting demand for new IFISAs) will allow existing customers to transfer existing ISA investments with other providers to Zopa.
4. And finally, once we have met demands of existing customers, we will welcome investments from new customers.

From December 2017, new lending will not be subject to Safeguard. All loans that currently have this coverage will continue to receive it.

Zopa today says it initially introduced Safeguard in 2013 to deal with a tax anomaly that unfairly penalised peer-to-peer lenders. The fund was designed to ensure that investors only paid taxes on the net income they received from Zopa borrowers: and not bad debt. In 2015 the tax laws were updated enabling investors to claim for relief on losses from bad debt. As a result, the primary reason for Safeguard was removed.
However in 2013 the Zopa website claim differed: ‘Zopa has created the Safeguard in order for you to get back all your money plus interest – without having to worry about a borrower paying you back. The Zopa Safeguard was created to step in and give you back all the money owed to you.’

Last year, based on customer demand, the company introduced Zopa Plus product without Safeguard coverage. Plus has proven popular and since March 2017 Zopa have been operating a waiting list for new investors due to the very high levels of demand. Zopa says that retiring Safeguard will allow the platform to provide greater target returns than Access or Classic (2.9% and 3.7% respectively, versus 3.9% in Core and 6.1% in Plus).

Andrew Lawson, Zopa’s Chief Product Officer, said: “We’re proud of our 12-year track record of prudent lending and have always provided positive returns to our customers. Safeguard was introduced in 2013 to deal with a tax anomaly that had led to peer-to-peer lenders being unfairly penalised. Since winning our campaign to change the tax rules, we no longer need Safeguard – as customers have proved by flocking to Zopa Plus. Now it’s done its job, retiring Safeguard, allows us to provide greater expected returns to our investors (because on average we over-fund Safeguard) whilst making the investor products even easier to understand. We’ll continue to maintain Safeguard for the rest of its life, and continue to build on our reputation for world-leading credit risk management.”

Relendex launches its Innovative Finance ISA

P2P lending platform Relendex today launches its Innovative Finance ISA (IFISA). Relendex is fully-authorised by the Financial Conduct Authority (FCA).  The UK Government introduced the IFISA in April 2016 and was created to sit alongside existing Cash, Stocks & Shares and Lifetime ISA products.

The Relendex ISA will work in a similar way to its regular accounts.  Lenders will decide which loans to invest in and can build their own diversified portfolio of loans. Through this IFISA, lenders will enjoy tax-free returns on loans secured against UK property.

The Relendex IFISA product has been added to the P2P-Banking ISIFA comparison database today.

Michael Lynn, founder and CEO of Relendex explains why the Relendex IFISA is a viable alternative to other ISA products on the market: “Many people have built up a significant nest-egg in their tax-free ISA but in the low-interest environment Cash ISAs are only earning around 0.5% pa and Stocks & Share ISAs are potentially quite volatile and therefore investors’ capital is at risk.  A secured lending P2P ISA is the best of both worlds.  The yield is good at between 6 and 10% pa, tax-free and there is considerable capital protection in the form of security over independently-valued UK property assets.  Of course property values can fall, but since our average Loan-to-Value is around 60%, the property concerned would need to fall 40% on average before any loss would result.

So if ISA investors are thinking of using this year’s Annual ISA Allowance or transferring existing ISA funds to a Relendex IFISA Account, they can build a diversified portfolio of good quality loans and achieve a good yield.  They can also reinvest the gross interest, to achieve compound growth and build their capital.”

The Relendex ISA is a non-flexible ISA. This means that all new subscriptions made during a tax year will count towards your subscription limit for such tax Year and cannot be replaced. Michael Lynn, explains:

“Our lenders see us as a longer term investment, although we do provide a secondary market if they decide to sell on early.  A non-flexible ISA recognises this longer-term demand and allows us to offer the ISA without any fees. Also, ISA holders are responsible for adhering to the HMRC annual ISA Allowance, so we track their subscriptions so they don’t inadvertently exceed their annual allowance with us.”

While there is an annual limit for new ISA subscriptions of £20,000 (for 2017-18 tax year), there is no maximum statutory limit to the amount that exitsing ISA money can be transferred across to a Relendex IFISA account (although we set a £10,000 minimum transfer value).  Transferring ISA investors will need to complete a Transfer Authority Form.  There is no need to get in contact with your existing ISA Manager as the Relendex specialist team will handle the entire process for you.”

Asked by P2P-Banking.com about the sales expectations regarding the IFISA product Lynn replied: ‘We will be disappointed if we don’t bring in at least 1 million GBP in the first month subject to how fast transfer-ins of existing ISAs will flow through from ceding managers.  Longer term it’s difficult to put a hard number on it but our conservative target is at least 10 to 15 million GBP in the first year.

Further questiones whether he expects deposits to come mainly using this tax year’s allowance or rather as transfers from amounts from the previous years, Lynn answered ‘The high base of existing ISAs (with over £200 billion sitting in Cash ISAs alone) strongly favours transfers.   But we also expect all transferring holders to utilise their current year annual allowance.’.

P2P-Banking also asked: ‘Should investors consider moving money from an S&S ISA to the Relendex IFISA?’. Lynn said: ‘We are not in the position to advise on individual portfolio allocations but do believe that we offer an attractive product on a risk/return basis.  Obviously secured lending at relatively conservative Loan to Value and diversification does provide a good degree of capital protection for investors and a good yield. The good news is that S&S ISAs and IFISA are not mutually exclusive, so investors may consider allocating to both.’

To date Relendex states it has experienced no defaults and has maintained an average yield of 8.78% pa.