Landbay, one of the newer peer-to-peer companies, are offering 2% cashback on funds lent before 31st July. The interest rate for an A+ loan is currently 4% per annum over 3 year years, which is comparable with Zopa. Their A+ lending rates are a little less than some of the other peer-to-peer companies such as RateSetter and Funding Circle, but Landbay would argue that these loans are secured.
Here is their full statement:
Earn £10 for every £500 added to your account and lent out in the A+ band between now and 31st July 2014.
Landbay is offering our members £10 cashback for every £500 you deposit in your account. This will be added to your account for any funds deposited before 31st July. This offer only applies to funds added and offered to lend out in the A+ risk band*.
*This will not apply to funds offered at rates above our recommended range for A+ lending - currently up to 4.2%. Cashback will be added to your account on the 1st August. Maximum cashback per lender of £500. Cashback will be credited to your Landbay account.
RateSetter, one of the leading peer-to-peer companies, has published a survey of MoneyWeek readers on the topic of peer-to-peer lending. Interestingly 93% of respondents indicated they believed peer-to-peer offers better value than banks, and 87% believe peer-to-peer a good investment opportunity. Just under one third (32%) stated they had used peer-to-peer services, indicating that there is still significant untapped money to fuel the continuing growth within the sector.
Here are the full results courtesy of RateSetter:
eMoneyUnion has become the first peer-to-peer company to offer secured personal loans. These loans of between £5000 and £500,000 will be secured as a first or second charge on residential properties.
These loans are now show on the P2P money comparison tables.
Here is the full statement from eMoneyUnion:
We believe this to be a worldwide first for consumer loans.
Following the great feedback received during our secured loans consultation, we are pleased to introduce the Risk Grades for Peer to Peer secured loans.
A number of lenders stated they are happy to receive a lower rate of return for lower risk 1st Charge Loans and would like a wider choice of lending opportunities than the 3 we initially proposed.
I hope you agree with me that the variation of yields and security offered are extremely attractive. We have put the first loan live on the eMarketPlace for your consideration this afternoon.
Loan To Value Calculations (LTV).
Property Valuation £200,000
Mortgage Outstanding £100,000
Pre- Loan = 50% LTV
eMoneyUnion Gross 2nd Charge Loan £20,000
+ Mortgage Outstanding £100,000
Total Post Loan Secured Borrowings £120,000
£120,000 Divided by House Value £200,000 = 60% LTV
Property Valuation £250,000
No Mortgage on Property.
Loan To Value Pre-Loan = 0% LTV
eMoneyUnion Gross 1st Charge Loan £115,000
No Mortgage Outstanding
Total Post Loan Secured Borrowings £115,000
£115,000 Divided by House Value £250,000 = 46% LTV
For S1,2, 3 and F3 loans we will be utilising a great online valuation service Hometrack. Hometrack is widely used by the UK’s leading banks and buildings societies for residential property valuation purposes.
For F2 and F3 Loans an Independent Chartered Surveyors valuation report will be instructed.
We will only produce secured Peer to Peer lending opportunities that are to be secured against residential property assets. We will not be delivering commercial property assets for Peer to Peer secured loans as we deem these to be high risk. You can visit their website by clicking on the link below for further information.
After consultation with a number of legal firms, we have decided to appoint Metis Law to perfect the security of the Peer to Peer secured loans. A loan will not complete and fund without conveyancing approval and confirmation of title and security.
Metis Law are very experienced of the unique Peer to Peer legislation, having met with the Partners I can confirm that we are in safe hands.
All borrowers will be credit scored and underwritten in the same manner as the current unsecured and personal guarantor loans.
As a responsible lending platform, no loan will be listed without a credit check, full income and expenditure assessment to prove affordability.
Loans will be introduced from other FCA Authorised Loan Brokers and Packagers, in some instances the Loan Broker and or Packager will have carried out valuations and credit referenced the borrowers themselves, we will accept these loans onto the platform if they meet our underwriting criteria, however all elements will be verified by the eMoneyUnion underwriting team and we will carry out our own credit checking for added security.
You are able to trade your Peer to Peer secured loan parts in the same manner as the other unsecured and personal guarantor loans without any platform charges being applied. We are seeing increased activity in this area and we expect the trend to continue.
Due to the robust nature of secured loans, the property is the security backstop in the event of non-payment. eMoneyUnion Peer to Peer Secured Loan Interest and Capital Repayments to lenders will not receive financial support from the eProvision fund.
RateSetter, one of the leading peer-to-peer companies have provided an update on ISAs. RateSetter is involved in discussions with industry peers and the Treasury on how best to allow savers to include P2P in their ISAs, ahead of a government consultation in July.
It has already been agreed that the P2P platforms will be able to offer their own product direct and act as ISA managers. However, the particulars of how this would work in practice have yet to be confirmed.
The options currently on the table include:
- A straight swap - platforms simply offering a straight Stocks and Shares ISA option investing in P2P lending only. However this would severely limit savers’ choices as they can only open one Stocks and Shares ISA a year, and so would have to put 100% in P2P or 0%.
- A diversified portfolio - a ‘Third ISA’ category based purely on P2P. This would allow savers to diversify across Cash, P2P and Stocks and Shares. P2P would represent a middle ground, with lower associated risk than Stocks and Shares, and higher returns than Cash.
- A blended product - platforms ultimately developing Stocks and Shares ISAs that allow both P2P and other investments.
Rhydian Lewis, CEO and Founder of RateSetter, said:
“Allowing P2P companies to become ISA managers is a key milestone in the development of the sector that will change the savings industry in the UK for the better.”
“The practicalities of how this innovation will work have still to be ironed out. The creation of a ‘Third ISA’ category would open up a whole new alternative to polarised cash or investment options for savers – providing that missing link between low yields and high risk.”
“But we believe that providing ISA savers with our own blended product is also a valid way to breathe new life into the ISA industry. As we are a technologically advanced sector, the hurdles this presents will not be insurmountable. However, the sooner the finer points are resolved, the sooner investors will be able to benefit.”
“The absolutely critical point is to not restrict savers’ options.”
Zopa have today announced some changes to their lending process. The most significant change is the increase in borrower exposure from 0.5% to 2%. The effect on lenders would be small, and although individual diversification would be increased, the safeguard fund backs individual loans. This change would, however, allow Zopa to fund up to 4 times as many loans with the same lender capital as before.
One of the other important changes is that repayments would be prioritised over new capital, and this would mean that existing lenders would achieve returns closer to predictions as their would be less "dead time" - time when funds are sitting in a lender's holding account not earning any interest.
Here is Zopa's full statement:
We wanted to make you aware of some key improvements we’re making to our loans matching engine over the coming weeks. Here is a quick summary but you can find out more information on our blog.
Phase 1 - Maximum exposure change
This week we’ll be adjusting the maximum exposure of how much you lend to each borrower from 0.5% to 2%. This enables us to allocate more of a lender’s money to each loan and allow funds to be lent more quickly, whilst still providing a good level of diversification.
Phase 2 – First in first out lending (FIFO)
Over the coming weeks we will be changing the queuing system to separate out new funds from repayment funds, with repayments being matched first. This allows existing funds to be matched more efficiently and allows us to give an accurate prediction of when new funds will be matched.
Phase 3 – End of day matching
In the following weeks we will begin matching loans in one process at the end of each day. This will mean that all our lenders will receive a more consistent blended rate, regardless of lending size in any given day.