04 July 2011

Zopa UK - a little less P2P

I felt a little sad that the peer to peer (P2P) lending site, Zopa UK, has decided to stop offering Zopa Listings.  This facility allowed individual borrowers to pitch to the Zopa lending community for backing for their individual needs, instead of having to convince the people who evaluate loan applications through the standardised Zopa Markets process.  It let the lenders make their own judgments about the rates and amounts at which they would be prepared to lend.

As the loans were filled Dutch auction-style, it was possible to end up with what seemed like a very acceptable rate as a lender, and the borrower could always decline if the overall net rate was too high.   Having said that, the predicted default rates in the Listings looked higher to me, and it's possible that some of these will turn out to be a case of  'a fool and his money... '.  Maybe these loans were high risk investments which weren't being priced correctly by the auction process.

I suppose it's a completely justifiable business decision, but it takes a little bit of the sport out of the game which becomes a little less P2P as a result.  Zopa Markets provide a more controlled way to lend. I  went there because of my frustration with the deposit rate I could get from a high street bank.   It may not be the thing for widows and orphans; only time will tell how good an investment this is, but so far, I seem to be ahead of the high street rates.  If you want to try it, the graphic below has a link (health warning: this includes a little incentive for me if you lend enough after signing up from here)


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