ReBuildingSociety cashback

July 12th, 2013

ReBuildingSociety has recently launched a £50 cashback offer, for those lenders who sign-up and lend £5000.  It is also open to existing lenders who have not yet lent £5000.  This offer is now featured on the P2P money cashback site.

To qualify, lenders must bid on new auctions and their bids must be accepted by the borrower at the conclusion of the auction. Once these bids have been formalised into micro loans, there is no restriction on when they can be sold or the premium / discount applied.

Here are the full terms and conditions:

  1. This offer is open to new and existing members, but not those who have already lent £5,000 in live auctions at 08.07.2013.
  2. Qualifying Lenders who transfer in money and increase their total amount lent out at to over £5,000 (“Qualifying Lending”) will qualify for a Reward.
  3. The amount lent only includes bids accepted by businesses and does not include your Funds (Committed but not invested).
  4. You can increase your lending by bidding on live loan auctions only.
  5. Only one Reward per person.
  6. In each eligible case, the £50 cashback will be paid into your account within 30 days of meeting the offer conditions.
  7. There is no alternative reward to this offer.
  8. reserves the right to amend, withdraw or extend any or all elements of this promotion at any time.
  9. Limited’s registered office is 16 Queen Square, Leeds, LS2 8AJ, United Kingdom (Company No. 07885342).

Funding Circle launch C- market

July 11th, 2013
Funding Circle

Funding Circle have launched their C- market, which has an estimated 5% annual bad debt and a minimum lending rate of 11.5%.

For a basic rate tax payer, this would equate to a return of 3.4% per annum, assuming that bad debt was at estimates, with a 1% fee.  However for a higher rate tax payer, this would reduce to 1.3% per annum, which is significantly worse than for the lower risk markets.

More details to follow...

Zopa close non-Safeguard lending offers

July 5th, 2013

Zopa launched Safeguard back in May 2013, and they have now taken the decision to withdraw all non-Safeguard lending offers from 11th July.  This change isn't a surprise as non-Safeguard lenders found that their funds weren't getting any matches.

One potential drawback with Sagefuard is that lenders are now no longer able to set their interest rates, which was one of the founding principles of peer-to-peer lending, and the reason why Zopa had its name.  The zone of possible agreement was the region where borrowers and lenders could agree on an interest rate.  However, on the whole, we are supportive of this move as the provision fund should give lenders a large cushion for bad debt.

Here is the fill statement from Zopa:

We're constantly working to improve Zopa and ensure all our savers are able to earn a good return by keeping their money working. This notification is to inform you that:

  • From 11 July 2013 we will switch off the matching of money on non-Safeguard offers.
  • From 5 August 2013 we will begin a migration process to transfer any non-Safeguard offers that have not been withdrawn to a Safeguard offer.
  • From 5 August 2013 an updated version of the Zopa Principles will come into effect.

Please read on for more details about these important changes and what action may be needed.

Closure of non-Safeguard offers

Due to the popularity of Safeguard lending at Zopa, there is now almost no lending through non-Safeguard offers. This means that if you have unlent money on a non-Safeguard offer you will be missing out on interest and we would like to help you solve this. We are therefore announcing the closure of non-Safeguard lending offers.

When will this happen?

As almost all lending is now through Safeguard offers, we will disable the matching process to borrowers from non-Safeguard offers from the 11 July 2013. You can find out more about Safeguard lending on our blog.

From 5 August 2013 any non-Safeguard offers with unlent money or with Auto Top Up enabled will be automatically transferred to a Safeguard offer.Find out more in our migration FAQ.

If you wish to continue lending on Zopa you do not need to take action. However, if you have unlent money on a non-Safeguard offer, you will earn interest more quickly if you sign in to your Zopa account and move your money onto a Safeguard offer today. Read our Safeguard FAQs for how to check if you have any unlent money on a non-Safeguard offer and how to switch to Safeguard if you haven't already.

If you do not wish for your non-Safeguard offers to be transferred to a Safeguard offer, please sign in to your account and withdraw your non-Safeguard lending offers before 5 August 2013. Find out how to withdraw a non-Safeguard offer in our help section.

Updated Zopa Principles

An updated version of the Zopa Principles will come into effect from 5 August 2013. You can read the updated Principles on the Zopa site. In addition to the changes concerning Safeguard lending outlined above, the Principles reflect other new features that Zopa will be introducing over the coming months:

  • Improving Rapid Return This will help savers to transfer loans that have an interest rate below the current tracker rates. Find out more in our Rapid Return FAQ.
  • Launching loans to small businesses Savers will lend to small businesses through their Safeguard offer and benefit from the protection offered by the Safeguard fund. The Department for Business, Innovation and Skills will be providing investment to lend to small businesses on the same terms as Zopa savers. Find out more on our business loans blog.

We will keep you posted on any further developments.

Industry comments on Funding Circle changes

July 4th, 2013
Funding Circle

It has been alost two weeks since Funding Circle raised their minumum lending rates, and then amended them following feedback from lenders.  Some of Funding Circle's peers within the industry have added some of their comments.

Comment from ReBuildingSociety:

There’s one topic dominating the peer-to-peer discussion boards at the moment – the decision for Funding Circle to implement a minimum bid restriction on its auctions.

Some of the criticism aimed at Funding Circle is that it has restricted the market and made it almost impossible for the crowd’s due diligence process to take place, such is the speed at which auctions are filling.

It is easy to sympathise with Funding Circle in the sense that it is dealing with quirks of a market that it created and every step is a step into the unknown. The minimum bid gives borrowers a clear view of the rate it will pay and will make marketing to borrowers and brokers much easier – it is now a fixed rate auction.

It is a sign of the popularity of the sector that too many people want to lend to UK businesses through Funding Circle for the existing auction process to support them. You could realistically assume that the typical Funding Circle lender profile has shifted from an investor to a saver and will shift again post-regulation.

All this is good news for the competition.

It will push early adopters onto the next level of platform, like, giving lenders greater choice in the market and allowing them to more evenly align the risk they see in the borrower to the rate they’re comfortable with. It is naïve in the extreme to believe that every C-rated business on Funding Circle carries the same risk.

That is an institutional approach and this market grew on the individuality of the lender market and the ‘fun’ aspect of evaluating and interacting with business owners, which wants to retain and nourish.

Comments from Assetz Capital:

I wanted to pass comment as someone working in another P2P platform, as this is indeed a big development and has the potential to affect the wider industry and not just Funding Circle. The rationale behind the change has never (as far as I know) been explicitly set out, but it's easy to guess that it's down to FC's concern that interest rates were too low for the associated risk. In theory, the change would result in less-experienced investors lending at a higher rate, meaning that their portfolio can withstand the likely proportion of defaults. However, what it's more likely to do in my opinion, is favour the less-experienced lenders, by driving out investors who want to get under the skin of a company (often by asking questions) before bidding. It's a tough situation to be in, but this isn't a road we'll go down - I'm confident that in the right environment and with risk properly explained and represented (this is key), interest rates will settle at a fair number.  At Assetz Capital, and as experienced SME and Property bankers, we have already made an in-depth assessment of the risk.  Whilst we offer fixed rate auctions to our lenders, we feel that the risk is priced fairly for both the borrower and a lender and is not subject to the whim of inexperienced investors.

Defaults might have formed part of the decision in setting minimum bid and, if this is the case, I full support Funding Circle in ensuring the less experience investors’ portfolios can withstand defaults. At Assetz Capital we take a different approach in taking tangible asset security against each loan so that should a default occur the ability to recover all, or at least most, of the lenders capital is greatly increased.  As such, we do not feel the need to set minimum bid rates.


Full story »

RateSetter reports a profit

July 3rd, 2013

Every week we receive press releases from various peer-to-peer companies, and tend to filter out the corporate news that doesn't really affect the average lender or borrower.  However the most recent press release from RateSetter had one interesting nugget of information, which was they reported a profit.

This is important for a business as continual losses can and will spell certain doom for any company, just as it would for an average person who spent more than they earned.