Zopa hikes investor rates for first time since 2015

By Ryan Weeks on 19th January 2018

P2P/Marketplace Lending

The platform’s riskiest products now carry a target return of 4.6 per cent. Meanwhile it has begun accepting transfers-in of pre-existing ISAs.

Zopa hikes investor rates for first time since 2015

The platform’s riskiest products now carry a target return of 4.6 per cent. Meanwhile it has begun accepting transfers-in of pre-existing ISAs.

Zopa is attempting to sweeten the deal for its investors. The leading consumer lending platform has boosted its target returns to 4 per cent for Core investors and 4.6 per cent in its Plus and IFISA Plus accounts. Plus investors hold exposure to higher-yielding and “riskier” loans than investors in Zopa's Core account, and both sets of investors may hold loans within an Innovative Finance ISA (IFISA).

Zopa has not increased its rates since 2015. In fact, since the Brexit vote in 2016, the platform has been through several rounds of rate reductions, as it was forced to slash its borrower rates to remain competitive in the prime consumer lending market. Faced with challenging consumer credit conditions, the platform revealed in August 2017 that it had suffered higher than expected losses, and would be cutting its projected returns for investors. It also pledged to cut back on its riskier loans, focusing instead on its bread-and-butter business of lending to prime consumers.

Zopa has said in a statement that today’s increase reflects “increased stability” in its consumer credit pricing. It also emphasised that it will still be lending to the same “low risk borrowers”, despite the higher rate of return.

Notably, Zopa has now also begun accepting transfers-in of pre-existing ISAs into its own IFISA product. Previously, Zopa’s version of the tax-wrapper had been available only to new money, from existing customers.

“In the same week as new research revealed that 2017 was the worst year on record for interest paid on cash ISAs, we’re delighted to offer investors a return of up to 4.6 per cent for accepting the risk of peer-to-peer lending,” said Andrew Lawson (pictured), chief product officer at Zopa. “Today’s increase in our headline rates reflects what our investors have been seeing for some time – higher rates of return across our four investment products.”

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