The UK’s first and largest peer-to-peer lender Zopa is cutting rates across all lender portfolios.
Zopa, the world’s original peer-to-peer consumer lender, is slashing rates by 0.2 per cent across each of its three lending products. Zopa will now aim to deliver returns of 3.1 per cent to Access investors, 3.9 per cent to Classic investors and 6.3 per cent to investors in Zopa Plus.
Zopa launched its new product suite for lenders in March of this year, adding the Access and Plus portfolios to its standard Safeguard-covered offering. As the name suggests, Zopa Access investors accept a lower rate of return in exchange for greater liquidity. Zopa Plus lenders, on the other hand, earn a premium rate of return by lending across riskier loan grades than other investors on the platform. The new rates will be effective as of October 28th.
Zopa’s chief product officer Andrew Lawson (pictured above) contacted Zopa lenders to inform them of the rate cut on Friday last week, writing that the borrowing market had become “significantly more competitive”, with six mainstream prime lenders further lowering their rates. He added that Zopa believes in a “prudent approach to risk”, and that it would be against the platform’s principles to lower its credit criteria in pursuit of riskier borrowers.
Zopa last cut rates in early September, again by 0.2 per cent across all products. That decision was taken as a direct result of the Bank of England’s move to cut interest rates to a record low of 0.25 per cent. While Zopa claims not to be “as closely tied to the interest rate as high street banks”, adjustments have nonetheless proven necessary.
The question of correlation between peer-to-peer lending platforms and the base rate is an interesting one. For platforms like Zopa, with fairly straightforward product offerings (term loans for consumers, in Zopa’s case), there is a clear need to remain competitive within the context of the wider consumer credit space. But other peer-to-peer lenders with more niche offerings will often insist that their platforms are not linked to fluctuations in the base rate.
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