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Rise in bad debts in October
There has been a modest rise in bad debts between mid September and mid October for two peer-to-peer companies. Both Funding Circle and YES-secure saw an increase of 0.3% in their lifetime bad debts. This takes Funding Circle's lifetime bad debt to 1.21% but that is still 1.91% better than their own weighted estimtes of 3.13%.
YES-secure operating under the Encash brand now have a lifetime bad debt rate of 4.21%, although this is too early to draw any meaningful conclusion as the new brand has not been operating for long enough. YES-secure's old brand has also seen an increase of 0.3% in their lifetime bad debts, bringing these to a mammoth 15.89% which was more than double YES-secure's own estimates.
None of the other peer-to-peer companies saw any increase in their lifetime bad debt percentage over the last month.
After the increase in bad debts in Funding Circle, they did see a reduction in "lates" (loans that have fallen behind in repayments) by 0.52% as some of the loans went into default and others got back on track. YES-secure still have the largest percentage of loans that are late.
While nobody likes to read about increases in bad debt, lenders should take heart that bad debts in the top 4 peer-to-peer companies (namely Zopa, Funding Circle, RateSetter and ThinCats) who arrange over 98% of all peer-to-peer lending in the UK are still well below estimates.