Zopa in the current climate

sabretoothtigger

Doesnt sound impossible, if it was the next door neighbours car you'd be liable so would the insurance I'd expect

masonic

sabretoothtigger wrote: »

Doesnt sound impossible, if it was the next door neighbours car you'd be liable so would the insurance I'd expect

I doubt many home contents insurance policies would cover anything you could not physically bring into your home.

darcyvuqua

i have just applied to zopa for a loan of £2000 i will be over paying and wnting to pay off in full in 5 months and when i have i would like to become a lender i was just wondering how long does it take for them to make a decision it will be my first loan with them?? cheers darcy

easteregg_2

darcyvuqua wrote: »

i have just applied to zopa for a loan of £2000 i will be over paying and wnting to pay off in full in 5 months and when i have i would like to become a lender i was just wondering how long does it take for them to make a decision it will be my first loan with them?? cheers darcy

It can take up to a few days to make the necessary checks, and then you can become a Zopa borrower.

MarkyMarkD

jamesd wrote: »

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.

A&L had no shortage of capital, and A&L has one of the most conservative lending books in the whole mortgage market. Apart from a (relatively small) book of slightly dodgy personal loans from a period a few years back when they went for volume over quality, they are a very secure lender.

The sale was right, because the value realised was more than the value artificially deflated by baseless rumours. That doesn't make the company "next in line for trouble".

jamesd wrote:

Quote:
Originally Posted by MarkyMarkD View Post
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.

If Zopa had a practice of consistently selecting the rates which were available to borrowers at the best time each week, knowing that by the time most people clicked the link in an advertising e-mail, that would be misleading. And that's exactly what appears to have happened. I have NEVER been able to obtain the rate I have seen advertised in a Zopa e-mail. Not once.

Thanks for the explanation, anyway.

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.

If they are lending at irrational rates, they clearly don't understand the risks they are taking on. That's my main concern with Zopa - there are people lending at rates which don't make sense on any sort of risk-adjusted basis. I don't believe that, as you seem to be suggesting, they are doing this to be altruistic. I think they are simply deluded about risk.

MarkyMarkD

Paul_Herring wrote: »

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

No it isn't.

It wasn't an insured risk.

It is the same as expecting an insurer to pay up when something happens which isn't covered - and that's what happened.

Saying it's "couldn't" is stupid. It wasn't covered. Why on earth should and would the FSCS pay up for something which it didn't cover?

Do you want to pay me lots of money if my car gets stolen and I'd insured it with a flaky insurer? Just because it seems like a good idea? I don't think so.

jamesd

Blah99 wrote: »

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.

You can get the 18 December 2008 weekly market data spreadsheet from the forum post link and the rest of the topic contains posts with links to older ones as far back as August 2008. The matches tab is all applications and only 10-20% go on to become loans, the actual percentage for that is regarded as a trade secret by Zopa.

You may like the December 2008 bad debt spreadsheet as well but the sample size is too small to draw clear conclusions about average default rates.

jamesd

MarkyMarkD wrote: »

If Zopa had a practice of consistently selecting the rates which were available to borrowers at the best time each week, knowing that by the time most people clicked the link in an advertising e-mail, that would be misleading. And that's exactly what appears to have happened. I have NEVER been able to obtain the rate I have seen advertised in a Zopa e-mail. Not once.

That's not surprising unless you're really fast to react. It won't take may applications to use the lowest available rates. It's one thing that I think makes it quite difficult to usefully mention Zopa in Martin's weekly emails - most people couldn't get the rate mentioned because earlier applicants would have exhausted the lowest rate funds.

If you'd like to look in more detail the weekly market data spreadsheet tells you every offer available, the exposure (amount per applicant), amount left in the offer and the rate that a loan using all available offers would get. Around the middle of the afternoon the A* 36 month market was offering:

£1000 at 6.58% (first 5 applicants would get below 6.7%)
£2000 at 7.00%
£3000 at 7.16%
£4000 at 7.28%
£5000 at 7.38%
£10000 at 7.69%
£15000 at 7.85%

The lowest rates offered by lenders were 3.50% (£4040 offered at £40 per applicant), 4.60%, 4.60%, 4.60%, 4.90%, 5.00%, 5.00%, 5.00% but only 31 offers below 7% were available, less than £10,000 between them all. Twelve of those only had enough available money for a single loan. That's before fee and bad debt allowance.

The first really substantial offer was 7% for £150 per applicant from a total lending pot of 42000 Pounds, so that one would be enough for 280 loans before running out. The bad debt estimate for the A* market is 0.5% and the Zopa fee for current lenders is 1% so a new lender would get 5.5% from a 7% offer if the bad debt estimate turns out to be right.

MarkyMarkD wrote: »

If they are lending at irrational rates, they clearly don't understand the risks they are taking on. That's my main concern with Zopa - there are people lending at rates which don't make sense on any sort of risk-adjusted basis. I don't believe that, as you seem to be suggesting, they are doing this to be altruistic. I think they are simply deluded about risk.

Given how few offers there are at rates below 7% I'm not sure you'll still think this once you see the numbers.

If you use the simple offer setup at Zopa then Zopa automatically adds its fee and bad debt allowance for the market to the percentage rate that you say you want, so people doing the easy thing will get a professional risk estimate added to the rates they are offering at.

For the highest risk of the regular markets, C for 36 months, the lowest rates offered are 8.60%, 9.00%, 9.30%, 9.30%, 9.30%, 9.30%, 9.30%, 9.40%, 9.60%, 9.70%. The bad debt estimate is 3.8% and with 1% fee that makes the lowest offer equivalent to 3.8%. It seems likely that these offers are from people paying the previous 0.5% fee and/or expecting lower than estimated bad debt rates, perhaps based on past performance.

There are commonly 10-80 applications per day for all markets combined so it might be more representative to use the rate after taking out all offers that run out of money after say five applications.

I haven't included the Zopa borrower fee in these numbers. That raises the APR for low value loans significantly.

CoogarUK

easteregg wrote: »

It can take up to a few days to make the necessary checks, and then you can become a Zopa borrower.

If you have passed all of those checks. It can also sometimes take a lot longer than a 'few' days.

CoogarUK

jamesd wrote: »

You can get the 18 December 2008 weekly market and the rest of the topic contains posts with links to older ones as far back as August 2008.

Yes, every week since I first suggested it :rolleyes: