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Zopa reduce lending rates
Zopa have announced that they will be reducing lending rates by 0.2% from 8th September following the reduction in the Band of England base rate.
Here is the email sent to Zopa lenders:
We're writing to let you know about upcoming changes to headline rates for Access, Classic and Plus. As of September 8th, 2016 all lender rates will decrease by 0.2%:
- Access will reduce to 3.3% from 3.5%
- Classic will reduce to 4.1% from 4.3%
- Plus will reduce to 6.5% from 6.7%
Any money in the queue from September 8th will be lent out at these new rates, so you have time to manage your lending settings if you wish. We will be updating our website later this week to reflect the new rates.
As you will be aware, the Bank of England recently cut interest rates to a record low of 0.25%. While we aren't as closely tied to the interest rate as high street banks, it has affected us in a couple of ways:
Headline rates for borrowers across the board are at a record low. We have seen 0.1-0.3% reduction in headline rates from other loan providers across key loan categories since the interest rate cut. It's important that we stay competitive while maintaining our high standard of borrower.
Banks have already reduced their rates dramatically: in many cases by more than 0.25%. This lack of competitiveness for investors from the banks has led to a surge in new lenders at Zopa; meaning slower lending speeds and queues of, on average, 10 days in Classic. This is something we closely monitor and manage. As we are a marketplace it's essential that we maintain the balance between borrowing and lending.
As with all marketplace lenders, when you lend your money your capital is at risk and is not protected by FSCS. Our risk statement has all the details.
As ever, if you have any questions our Customer Services team are on hand to answer them.
The original concept of peer-to-peer lending allowed lenders to set their own interest rate, but a growing number of larger peer-to-peer companies now set lending rates (with the noteable exception of RateSetter who still allow lenders the ability to set their own rates).