RateSetter cashback offer

June 28th, 2015

One of the leading peer-to-peer companies in the UK, RateSetter, have announced a new cashback offer from 1st July for new and existing lenders.  New lenders are able to earn an additional £25 for signing up through the P2P money cashback site.

This has generated some discussions on the P2P Independent Forum which are an interesting read.

Here is the email send to existing lenders:

Unprecedented demand for borrowing has driven lending rates to very high levels, providing you an excellent return on your investment.

If that wasn't enough reason to invest more we are giving all our lenders the added incentive of cashback.

We've also listened to your feedback following our last cashback offer. To help you organise your additional investment, we're giving you plenty of time. The offer starts on 1st July.

Cashback offer:

  • Invest an additional £2,500 and earn £25 cashback
  • Invest an additional £5,000 and earn £50 cashback
  • Invest an additional £10,000 and earn £100 cashback

What you need to know

  • This offer is limited to a two week period, so don't miss out
  • You need to commit the additional deposited funds for at least 1 year to benefit from this offer
  • Please remember that your returns are before tax, assumes you reinvest throughout the term and assumes coverage from the RateSetter Provision Fund now standing at over £14m
  • Capital is at risk and your money is not covered by the Financial Services Compensation scheme

Here are the full terms and conditions:

  1. Offer valid from 00:01 on 1st July 2015 and ends 18:00 on Tuesday 14th July 2015.
  2. Lending orders not completed before the deadline will not be eligible for the offer.
  3. In order to be eligible for cashback, the additional funds must be committed to a lending term of 1 year or longer.
  4. Maximum cumulative cashback per customer is £100.
  5. We will credit your account with the cashback bonus within 28 days from the end of the promotion.
  6. Cashback can be used for lending or can be withdrawn.
  7. Sell-out requests made during the promotional period cannot be reinvested in order to receive the promotional bonus.
  8. Contracts repaid during the promotional period will still be valid for the promotion.
  9. The member-get-member promotion can be used in conjunction with this cashback offer so feel free to introduce a friend to RateSetter and you can both benefit.
  10. RateSetter reserve the right to retain the cashback earned in connection to a Sell-out request during this promotion.

What are mini-bonds?

June 28th, 2015

There are several peer-to-peer and crowdfunding companies, including Wellesley & Co and CrowdCube offering "mini bonds".  But what are mini bonds?  Choice Loans have put together an informative infographic on the subject.

View Interactive Version (via Choice Loans)

CrowdProperty lend £1million

June 28th, 2015

CrowdProperty has today joined the select number of peer-to-peer companies that have lent £1million.  According to CrowdProperty just under 2000 lenders have registered on the platform since launch last year.

Here is the full press release:

CrowdProperty (www.crowdproperty.com) today announced it has passed the £1m lending threshold, with a total of £1.43m now raised across four residential property development projects in the UK. Almost 2,000 people have become registered lenders on the platform since its launch on August 31st last year, with 160 of these having lent money to current projects and who are now earning 10% per annum gross interest on their money.

The first property development to go live on the CrowdProperty platform was a pub conversion, creating four residential flats and two commercial units, which took 14 weeks to fund. Since this, the time to complete funding has been reducing as lender liquidity increases, with the fastest fully-funded development to date having taken just six weeks. The company is confident that a one-week timescale will become possible within the next few months as lending appetite continues to grow.

Simon Zutshi, founder director of CrowdProperty, explains:

“Passing the £1m target for lending is a key milestone in our growth strategy but we expect growth to accelerate significantly now that we have so many new, active lenders joining our crowd. With any new P2P proposition it is vital to ensure that early lenders build their confidence with real returns from solid projects delivering great value. Our lenders receive 10% per annum returns on the money they lend. This is higher than many other peer-to-peer lending platforms, which often do not secure the lending and one of the reasons why we always commit to take the 1st charge of the property asset lent against.

Zutshi continues:

“Another exciting development which has recently become available via our platform is the added potential now for anyone with a SIPP or SASS pension to lend to our development projects, providing another angle for many people wanting greater diversity and a solid return on their capital.”

The revenue model for CrowdProperty is straight-forward: borrowers pay a one off 3-5% arrangement fee and pass the full amount of the gross interest (9-11%p.a.) payable on the loan to the crowd of private individuals (lenders). Borrowers can apply for up to 100% finance on new developments at 9-11% p.a., depending on a set of proprietary due diligence criteria. Unlike most P2P lenders, CrowdProperty secures all loans with a first legal charge against the property asset lent against – in much the same way as a bank or building society would.

Since launch 2,000 prospective lenders have registered on the CrowdProperty website and more than 650 potential borrowers have also registered - with almost 100 property projects having already been submitted by potential borrowers for consideration. More than 2,500 people now follow CrowdProperty on social media and anyone with £500 or more can pledge towards the projects and receive potential 9-11% gross returns. Capital is at risk, see website for details.

Peer-to-peer better on customer satisfaction

June 28th, 2015

Peer-to-peer lending platforms such as RateSetter score more highly than the top-rated savings account providers for customer satisfaction, according to a Which? survey of 5,000 members.

RateSetter is the highest-rated peer-to-peer lender, with a total customer satisfaction rating of 80%, scoring the maximum 5 stars for rates offered and four star ratings for explanation of risks to investors, customer service, default rates and ease of use.

91% of Which? members who invested more than two years ago still have investments with peer-to-peer platforms, demonstrating that the vast majority recognise the benefits of including peer-to-peer within their portfolios.

Which? members with a RateSetter account have invested an average of £15,134, with one member commenting: “I am getting good returns on my investments and am able to control that level of return”.

Rhydian Lewis, CEO at RateSetter, commented: “For the members of Which? to have given their vote of approval to peer to peer lending is a significant moment for our industry.  I am thrilled that Which? members are so positive about RateSetter in particular, with a customer satisfaction score that exceeds their rating for any savings account provider.”

Yorksire Building Society's guide to peer-to-peer lending

June 22nd, 2015
Yorkshire Building Society

On Friday the Yorkshire Building Society published their guide to peer-to-peer lending, entitled "Peer-to-peer lending explained".  The first line of the press release sets the tone for the guide:

Research from Yorkshire Building Society has highlighted a lack of understanding about peer-to-peer investment (P2P) and the potential risks it poses among consumers.

The Yorkshire Building Society’s guide highlighted the lack of understanding about peer-to-peer lending, and we would fully concur that there are a lot of misconceptions about the industry.

Ian Gurney, founder of p2pmoney.co.uk responded to the research:

Peer-to-peer lending has grown into a £2billion a year market in the UK.  There are now more than 50 companies operating within this sector, covering various degrees of investment risk.  Returns of 5% to 6% are achievable but there are risks to capital and lenders should do research, as with any financial investment.  Peer-to-peer lenders need to ensure their investments are fully diversified between multiple borrowers and P2P providers.

So why would an organisation publish a guide about a product that they don’t offer?

Banks, building societies and other financial institutions are now starting to take notice to peer-to-peer they are a direct competitor to the incumbents.  We believe that some of these risks are sometimes overstated, or taken out of context.

We fully agree that lenders capital is at risk, however returns of 5% AER to 6% AER are achievable even after deductions for basic rate tax payers, where leders have diversified sufficiently.

Peer-to-peer lending isn’t just unsecured. Loans secured on property and assets are available. Some peer-to-peer providers operate provision funds to reimburse lenders when a loan defaults, and this is paid for through an increased margin between the lender rate and the borrower rate.

As with any financial investment, peer-to-peer lenders should do some research. Lenders need to ensure their investments are fully diversified between multiple borrowers and P2P providers to ensure that a single negative event does not adversely affect their overall return.

Read our press release on the subject.