UK

Zopa UK reshapes markets

wiseclerk

Zopa UK has announced that it will remove the options to lend for 12, 24 or 48 months and concentrate on lending terms of 36 and 60 months. The changes apply only to money lend through Zopa markets not to Zopa listings.

Why are we making these changes?
– Since Zopa began more than three years ago, more than 95% of your loans have been taken for a period of 3 years or less.
– The popularity of larger loans repaid over 5 years is increasing, particularly since we introduced the new fixed borrower fee.
– Almost half of our new lenders who sign up to Zopa do not become active and our hypothesis is that it is just too time consuming for them to make offers to all of our markets.
– This allows us to simplify the marketplace considerably, while still allowing borrowers to repay their loan early with no penalty.
– Because listings still enables all loan terms from 1 to 5 years, Zopa will continue to offer a wide variety of borrowing and lending options.
– By structuring repayments over at least 36 months, we aim to encourage fewer borrowers to repay their loan early, maximising the interest you earn from each loan and reducing the period your money might spend in your holding account. This is because the loans that have been repaid early to date were mostly taken for 12 and 24 months in the first instance, so that borrowers had paid back a good proportion of their loan after just a few months.
– We’re not envisaging that there will be any significant financial impact for Zopa from these changes. At most, we would earn 0.5% of the outstanding capital for a little longer if we can dissuade early repayment, but since we would hope that lenders would relend any funds repaid early anyway, we’re unlikely to earn anything more significant. These changes are purely aimed at simplifying our offer.

Lender reactions in the forums (19 pages of comments) are mostly negative.
Some lenders speculate that this move is a necessary result of the new flat fee which was introduced earlier. Borrowers pay 94.25 GBP of the loan amount. For short term loans the impact of this fee on the APR is higher then for long term loans. 

Zopa loan volume

wiseclerk 2 Comments

As there is no Zopa loan statistics site, it is not possible to track the Zopa growth daily. You have to wait for the instances where Zopa announces milestones.

Today Zopa – in an announcement to celebrate it's third birthday, said:

Since we launched in March 2005, £20 million in unsecured personal loans have been arranged at Zopa in the UK. More recently growth has been boosted by the global credit crunch which is driving unprecedented demand for P2P personal loans as banks become less competitive and tighten their lending criteria. All of this has also pushed up returns to Zopa lenders to an all time high.

At the current exchange rate that is approx. 40 million US$.

 

Digesting new Zopa listings infomation

wiseclerk 1 Comment

Zopa's new Zopa listings contain several pieces of information. Apart from the "basic information" which include loan amount, loan length, preferred rate, loan purpose, borrower ID, borrower signup date and listing end date, these are:

Credit score

The rating we give to the borrower’s credit score at Callcredit, a UK credit reference agency, relative to other Zopa borrowers

Affordability

Zopa rating (stars) for the borrower based on income and expenditure details provided by the borrower.

Stability

Zopa rating (stars) for the borrower based on details provided by the borrower, such as residence and employment.

Personal profile

Listing text supplied by borrower

Income/Expenses

Self reported detailed budget (see screenshot above for example) Continue reading →

Prosper announces new features for lenders

wiseclerk 1 Comment

Prosper has confirmed that it will release new lender features over the next few months. Most important is an risk estimator that will allow lenders better to gauge the default risk when bidding. Prosper will use its own data from past loans to calculate the risk level rather then only rely on Experian data like in the past.

See Mike's question and answers with Prosper Andrew and Matt's story on the changes for more details.

James Alexander, Zopa co-founder, on peer to peer lending

wiseclerk

Intruders TV did a long interview with James Alexander of Zopa.com covering the development of Zopa, regulation, market approach, lender and borrower advantages, the competition and other topics. The video starts of with polling passers-by on the street whether they heard of Zopa and would use peer-to-peer lending themselves.

(Source: Intruders.tv) 
P.S.: Noticed the bulletpoint on the whiteboard "Sell loan on phone".