By Aisling Finn on Wednesday 1 April 2020
Just over two weeks ago the platform paused withdrawals due to the unusual market conditions caused by the coronavirus.
Assetz Capital, the UK-based peer-to-peer lender, has today announced a short-term plan to help borrowers and lenders that use its platform in the wake of disruption caused by the coronavirus pandemic.
To ensure the platform stays afloat during the economic downturn, Assetz will implement a 0.9 per cent per annum ‘loan servicing fee’ for all of its 38,000 investors starting 1 May 2020.
The fee equates to 0.075 per cent per month, so for a typical lender with £20,000 of loan investments the loan servicing fee would be £15 a month.
The lending platform also noted that all lenders will be updated regarding any loans immediately impacted by the changes, although it added that at this current time there aren’t many.
Manchester-based Assetz Capital revealed that, in line with Government recommendations, commercial mortgage holders and borrowers will not be defaulted over this initial three month period.
It also expects that some borrowers will need to pause or reduce payments, but that the company still expects to “pay the bulk of lender interest over the next few months.”
To help cover some of this, Assetz Capital is introducing a small servicing charge to borrowers to cover the extra work and cost of managing the loan book over this period. This charge will be added to the loans, meaning that borrowers won’t need to find further cash in the short-term.
Lastly, the peer-to-peer lender has said it is able to return some cash to lenders after it earlier blocked all withdrawals from its platform, owing to the disruption caused by the coronavirus.
Assetz Capital revealed that after the initial rush to withdraw funds, many people have cancelled those requests and there have been very few new withdrawal requests.
The platform has blamed the slow-down in withdrawals on a combination of high withdrawal requests, slower repayments on loans, less refinancing of its loans and high street banks having “seemingly paused for thought.”
Stuart Law, CEO of Assetz Capital, said: “Overall, we are realistically optimistic, with a solid plan developed by a vastly experienced team. We believe this won’t just see us through but help all our stakeholders thrive in the long-term.”
“With the stock market currently down around 30% and property funds and some other peer-to-peer platforms completely closing withdrawals, we believe we are in a pretty reasonable position which we will build on over the coming weeks,” he added.