Zopa in the current climate

CoogarUK

MarkyMarkD wrote: »

It's not a case of "wouldn't/couldn't". The money simply wasn't covered by the FSCS.

Absolutely. The first £16k was Iceland's responsibility, not the UK scheme.

Thank you for beating me to it!

CoogarUK

TechnoBadger wrote: »

Do you have a hidden agenda CoogarUK?

For the avoidance of doubt:

No, absolutely not. Categorically no hidden agenda from me.

Why would you even suggest such a thing?

amcluesent

>Categorically no hidden agenda from me.<

Doesn't really matter now, as you're on my ignore list

jamesd

MarkyMarkD wrote: »

A&L didn't get "bailed out". It was acquired by Santander at a fair price, and no subsidy from anyone was involved.

True that no government money was involved but A&L was next in line for trouble. Not an unreasonable price given the condition of the stock but it was very much devalued by the rumours surrounding it. Something of a forced sale IMO but I should have been a bit more naunced in how I described it, I agree.

MarkyMarkD wrote: »

Whilst it's great that you are such a supporter of Zopa

It's a tool. Just one of many. I try to mention where it can be useful for either borrowers or investors. Different times for each. I've borrowed via Zopa at a rate below the rate I've lent at. Just at different times, following the cycles of the market.

MarkyMarkD wrote: »

there are clearly some complete idiots lending money via Zopa. There were times when you could borrow from Zopa at 3-5% at a time when you could get way more than that in a (far more) risk-free bank savings account. After deducting Zopa's costs, that implies ridiculously low yields for the lenders

Some people have lent at rates I don't personally consider worthwhile, but it's a (mostly) free market, so that's their prerogative. Worth remembering that not everyone is driven by trying to achieve the highest possible lending rates. There's a weekly spreadsheet available that gives the rates, total amount and amount available per borrower for every offer.

MarkyMarkD wrote: »

or untruthful advertising by Zopa. (And I have more than a fair suspicion of the latter, particularly given that every single one of the dozens of times I've followed a link in an e-mail to an unbelievable rate loan from Zopa, it has turned out to be complete b*******s).

You should really dismiss that concern. I'm sure that the email was accurate at the time it was prepared and I keep a pretty close watch on what Zoa does so I probably would have noticed anything significantly wrong. But what you should do is understand the market, so you understand how and why such rates can be quite volatile.

Each person offers an amount of money and a maximum per borrower from that pot. A loan is built by combining rates from lots of people like this. So long as the people who are lending at the lowest rates have money still not taken up by borrowing requests, the loan rates will be the lowest available. The general quotes generated a little after 1AM are likely to be at the lowest rate achievable each day on many days, though that's not so likely on Mondays because of the backlog of applications from the weekend that will be declined early on Monday.

As the money is taken up from the lower rates, it gradually becomes necessary to include some money from higher rate offers to get to the full loan value and the pricing slowly increases. If there's a fair bit of money at very low rates there can be a significant jump when that goes away. Say if someone was to offer up to 1000 per borrower at 5% with a total of 5000 to lend. The first five people would get a nice discount.

That's the very short term pricing aspect.

Beyond that there are market trends and larger amounts of money - enough for perhaps 300-800k of loans at the moment - that is available at rates that aren't much higher than the absolutely lowest rates.

After that you get people like me who won't lend much money at low rates and are more interested in lending to people refinancing existing borrowing than offering the most competitive possible low rates.

So what you end up with is a fairly shallow cheap money pool, a quite large pool of money that's at a not unreasonable price and a big reserve pool that only comes into play when rates are higher. If demand for loans is high both of the first two pools can be severely depleted or vanish entirely and at that point Zopa borrowing isn't very competitive but lenders can make good returns by helping people save money on their credit card or overdraft debts.

Now we're in a seasonal low in borrowing demand, so loan quotes aren't really likely to get much lower due to seasonal factors. What'll happen in the new year is that people will start to borrow instead of paying credit card rates and that will gradually deplete the fairly large pool of money that's available at the moment.

An unknown is how the credit situation and savings account rates will affect this. If people start to shift lots of money into Zopa to lend that could cause rates to fall below current rates. And if banks continue to often lend at higher than normal rates that would tend to support the Zopa market and cause demand to be higher than usual. No way to tell what the balance will be between these factors.

There's also a cycle within the week, with the worst rates normally early on Monday and on Sunday, then Saturday. And a monthly cycle with rates dropping after the first few days of a month as many monthly payments are made and rising during the month as that supply of extra money is depleted. You can do comparatively well as a lender or borrower by knowing and using these cycles to your advantage.

jamesd

CoogarUK wrote: »

No, absolutely not. Categorically no hidden agenda from me.

This is a pretty true statement. CoogarUK is very much inclined to be outspoken. CoogarUK has some things that CoogarUK doesn't appreciate about the way Zopa works and will undoubtedly continue to write about those things. The writing can be quite repetitive but there's always more than a grain of truth about Coogar's experience as a lender in it. Wouldn't be a good idea to treat CoogarUK as a troll. More a regular reminder of the day to day irritations that affect each lender to differing degrees depending on just how they lend.

CoogarUK

amcluesent wrote: »

>Categorically no hidden agenda from me.<

Doesn't really matter now, as you're on my ignore list

Fine by me :cool:

CoogarUK

jamesd wrote: »

This is a pretty true statement. CoogarUK is very much inclined to be outspoken. CoogarUK has some things that CoogarUK doesn't appreciate about the way Zopa works and will undoubtedly continue to write about those things. The writing can be quite repetitive but there's always more than a grain of truth about Coogar's experience as a lender in it. Wouldn't be a good idea to treat CoogarUK as a troll. More a regular reminder of the day to day irritations that affect each lender to differing degrees depending on just how they lend.

You name-dropper!

Can we please get back on topic now?

Blah99

jamesd wrote: »

There's a weekly spreadsheet available that gives the rates, total amount and amount available per borrower for every offer.

Do you have a link to this spreadsheet, or can you make it available somehow? I'd be interested to see a cross-section of, say, 3 months of data.

Paul_Herring

MarkyMarkD wrote: »

It's not a case of "wouldn't/couldn't". The money simply wasn't covered by the FSCS.

Oh, that would come under 'couldn't' then. :rolleyes:

It's like asking your next door neighbour's insurance company to pay up because your car has been stolen.

No it isn't.

masonic

Paul_Herring wrote: »

No it isn't.

True. It's more like asking your home contents insurance company to pay out for damage caused to your car when your house burned down.