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What’s Happened Recently That You Need To Know
We're not a P2P “industry news” site, but we do like to report news if it directly helps individual lenders to make better lending decisions, which is our entire raison d'être.
A lot of news like this has occurred over the past six weeks or so, so here's a round-up:
Risks at Zopa have risen
- Zopa has ditched its reserve fund, called “SafeGuard”, to cover bad debts.
- The interest you earn on its new Zopa Core lending account has just nudged up from 3.7% to 3.9% compared to its previous “Zopa Classic” account.
- Consider pausing new investment into the new Zopa Core product until 4thWay has conducted new stress tests.
The above changes probably mean the risks have gone up for those who used Zopa Classic and move on to Zopa Core. 4thWay will conduct new stress tests on Zopa's loanbook shortly to re-check the risks and see if its new lending account will still earn a 4thWay PLUS Rating.
The Zopa Plus lending account has been unaffected by these changes.
No fee-free early access at Zopa any more
- All accounts now charge a 1% fee.
- This is still a low fee for early exit, easily and quickly covered by interest earned.
Like its previous Zopa Classic account, the new Zopa Core account charges 1% for you to leave early. Zopa no longer offers an easy-access account that is fee-free to exit early.
However, 1% is a one-off fee and it's not large compared to earning around 4% per year. After you have been lending for just a few months the interest should already have covered any future fee, barring exceptional bad debts.
New IFISAs (tax-free lending accounts) launched recently
The following have launched IFISAs in recent weeks:
- Proplend* (existing lenders only at the moment). (Proplend Quick Expert Review.)
- Relendex*
- Zopa (existing lenders only at the moment). (Zopa Quick Expert Review.)
Read everything you need to know about IFISAs, and see the full list of 18 available tax-free accounts, in The IFISA (P2P ISA) Guide.
Assetz Capital launches new property lending account
- Assetz Capital has launched a new product called the Assetz Capital Property Secured Investment Account.
- One of 4thWay's experts will need to assess this separately and will write a mature review for the next newsletter.
Wellesley pauses P2P lending
- Just to be clear that the lending products currently offered by Wellesley & Co.* are not P2P lending accounts and they therefore have additional risks.
One key strength of peer-to-peer lending is that each borrower owes you and not the P2P lending site in the middle, giving you a huge amount of protection in the event the P2P site goes bust. Non-P2P lending doesn't necessarily offer you the same or similar levels of protection. (Read The 13 Key Peer-To-Peer Lending Risks Risks.)
LendingCrowd launches a self-select IFISA
- LendingCrowd* had already launched an IFISA, but it's great to see it has launched another one where you can choose the loans to businesses that you will lend in for yourself.
- Please, please, please do not concentrate more than 1% of your money in a single business loan and preferably no more than 0.5%.
Read this recent article, which suggests rules for selecting business loans for yourself (albeit using Crowd2Fund and not Lending Crowd as an example). Read more about LendingCrowd's record in LendingCrowd On Track For A Top Rating.
Landbay's fixed-rate accounts offer swifter lending
- Landbay's fixed-rate lending accounts appear to offer swifter lending over its tracker products.
We have warned over the past six months or more that Landbay* has been approving very few new loans and this likely means that lenders have money sitting around in Landbay accounts.
Over the past few weeks though, Landbay has completed £1.3 million in mortgages and it expects that all lenders' cash that was in the queue for its fixed-rate lending accounts will be lent out.
Lenders with cash waiting for tracker loans face an expected wait of another two months, so it looks like Landbay is finding more borrowers for fixed deals, which might make fixed-rate lending faster at Landbay.
Independent opinion: 4thWay will help you to identify your options and narrow down your choices. We suggest what you could do, but we won't tell you what to do or where to lend; the decision is yours. We are responsible for the accuracy and quality of the information we provide, but not for any decision you make based on it. The material is for general information and education purposes only.
We are not financial, legal or tax advisors, which means that we don't offer advice or recommendations based on your circumstances and goals.
The opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by ESMA or the FCA. All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.
*Commission, fees and impartial research: our service is free to you. 4thWay shows dozens of P2P lending accounts in our accurate comparison tables and we add new ones as they make it through our listing process. We receive compensation from Landbay, LendingCrowd, Proplend, Relendex and Wellesley & Co., and other P2P lending companies not mentioned above either when you click through from our website and open accounts with them, or to cover the costs of conducting our calculated stress tests and ratings assessments. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.
