Zopa in the current climate

jamesd

It was a good idea and I've used the facility myself. Thanks!

Blah99

jamesd wrote: »

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.

Thanks for this. So there's no way to obtain a list of "successful" loans and percentages, just a list of applications? That's a shame, because that would really be the proof of the pudding...

CoogarUK

jamesd wrote: »

It was a good idea and I've used the facility myself. Thanks!

You're very welcome. Of course, I am no longer able to make any further suggestions (not that would want to now anyway)

jamesd

The only way is to track the succes rate for those you participate in. The figure I gave comes from my results when doing that. I use 10% as my working assumption most of the time. Not for Y over 10k, where zero success rate is closer.

jamesd

CoogarUK wrote: »

You're very welcome. Of course, I am no longer able to make any further suggestions (not that would want to now anyway)

Hard to know what to say to you about this. If it's true that you were most impolite in private to moderators and continued to discuss subjects that were not to be discussed, on a topic where your repeated posts have sometimes been tiresomely repetitive, then the result is unsurprising, sad though it is to lose your often very useful participation. Similarly, the moderators seemed not to find a way to effectively deal with you without escalating the situation.

I moderated well-established communities at various levels for many years. If I was moderating a place and you were to say send a private message cursing me for a moderation decision there's a fair chance that I'd throw you out for a while myself. Moderators don't need or generally deserve being on the receiving end of such grief. Try it on me at my workplace and there's an excellent chance that you'd be shown the door as well. It's simply not appropriate behaviour.

If you'd like to try one possible solution I'd be happy to try to mediate. Do be aware that if you started to toss insults around I'd say throw you out for a while. If you'll be unable to resist doing that there's no point in even trying because you'll just end up in the same situation again.

There's clearly a good deal of affection for you over there so it would be a shame if no solution could be found.

For ongoing issues, just set at timer. Two weeks between mentions. That way it won't be frequent enough to bug anyone. I do this myself from time to time when it comes to me mentioning things that irritate or annoy me. It's just sensible practice in any community.

MarkyMarkD

Jamesd

This thread: http://www.beatthatquote.com/forum/viewtopic.php?id=28 is making the same sort of point that I am. Note that it is almost 2 years old, but the logic applies still - prevailing rates (for savings) were way higher then than now, and you suggest that "not many" people are taking rates under 7%.

So how on earth were Zopa offering 4.7% in early 2007?

Truth to be told, they weren't. They were advertising 4.7% via Beatthatquote.com, but with next to no availability. That's misleading advertising.

If you review the ASA's adjudications, they demand that for limited offers there has to be reasonable availability. And under the APR regulations, a "typical" rate has to be available to 67% of those applying. That can't apply if the rate is available only for the first x (where x is a tiny number) people who apply and then the rate zooms up.

To be fair, beatthatquote are currently quoting 9.2% APR (and typical APR) for Zopa, which sounds a lot more like it. Maybe they have got their house in order at last.

Incidentally, sub-dividing your lending into different classes of risk, and then quoting a typical rate for each, is a very devious way of by-passing the "typical APR" rules. Obviously the more sub-categories you divide potential borrowers into, the more people will qualify for a particular APR hence making it "typical". But you can manipulate the results of who gets a particular APR, as you merely declare that they weren't "A*" as they originally guessed.

Other "normal" lenders actually have to offer the "typical" rate to 67% of those they accept; Zopa just have to offer the "typical" rate to 67% of those they deem to fall into each category - easy peasy.

jamesd

With typical days having around 40 applications across ten markets it's easy for Zopa to be entirely fair to quote rates that would be available to only a few applicants. Who cares whether 100 or 1,000 can get a rate when only five or ten will apply for it? Or, quite often, one person or none?

Zopa is saying that available rates for 5000 at 01:10 today were 7.3% APR, 7.7%, 9.2%, 11.4% and 12.1% in A*, A, B, C and Y 36 month markets. That seems accurate based on the offers that were in the last weekly spreadsheet.

At the moment beatthatquote is using 9.2% for Zopa in their good credit score section, 10.3% for fair and 12.4% for poor. If I wanted to give quotes for good and fair I'd be quoting 9.2% (Zopa's B36) and 11.4% (Zopa's C36). Zopa doesn't offer any products at all for those with poor credit ratings - their filters are intended to exclude those with the lowest 50% of credit scores. I don't know how beatthatquote gets their numbers but they don't seem to be using unaltered current numbers provided by Zopa for any but good. As a courtesy to someone else (other than MSE) using the Zopa referral payment scheme I'll refrain from speculating about how they set the rates they give.

Normal lenders handle the typical rate similarly to Zopa, using different products and brands instead of markets. If they don't offer varying rates for a product they reject those who don't meet whatever criteria they have set for their attractive rate or offer a different product instead, something credit card companies are particularly known for doing. If they offer varying rates then they select a mixture of applicants to hit the target.

Zopa tries to do a bit better by telling people which rate group they are in and what rate they will get if accepted, after doing a quotation search of their credit record. Most of the variable rate mainstream lenders don't bother to do a quotation search but instead make you get an application search recorded before telling you the rate you'll get, though at least by the time they tell you the answer you will be sure that you will be accepted for that rate. But it may well not be for the product you originally applied for.

If you want to look back to 2007, have a look at the Zopa MI data and then look at the 36 month markets information to see how the available rates varied. There's also a graph of rates for the last five quotes in each market but that data doesn't go back as far as 2007. Rates of 4.7% are consistent with the rates that were available back in early 2007. If you want to look at Zopa lenders complaining about rates just look at the older posts in the message board over there. Then look at rates available for bank savings accounts and personal loans for comparison.

If you have a Zopa account you can check the times, amounts and rates for the last five quotes in each market and see the live list of rates offered by individual lenders at any time.

CoogarUK

jamesd wrote: »

If it's true that you... continued to discuss subjects that were not to be discussed

Yes, it's true. Zopa were taking much too long to process some loan applications, particularly in the Young markets but it was unilaterally decided that this subject was no longer open to discussion. Even though a moderator decided that this was no longer a subject that warranted further debate, Zopa later acknowledged the situation in a weekly email and took on an additional underwriter. Then again, what would I know? :rolleyes:

And yes, it is also true that I was rude to a moderator in a pm, but only after said moderator had taken to systematically deleting many of my posts, all of which were relevant and on topic.

Zopa likes to consider itself an 'open society' but in reality that is quite some way from the truth.

CoogarUK

MarkyMarkD wrote: »

Jamesd
So how on earth were Zopa offering 4.7% in early 2007?

Truth to be told, they weren't. They were advertising 4.7% via Beatthatquote.com, but with next to no availability. That's misleading advertising.

Oh, Zopa are pretty adept at that and they don't even seem to really care.

They don't draw the line at misleading just borrowers either.

Today they quote a headline annual return for lenders of 9.1%

To describe that as misleading would be somewhat of an understatement!

jamesd

CoogarUK wrote: »

Yes, it's true. Zopa were taking much too long to process some loan applications, particularly in the Young markets

Well, that's your oft-stated opinion, though you do receive little agreement from others, who tend to credit the higher than usual level of irritation it seems to cause you to your unusual approach to lending.

Still, the fact checking can take a while when a loan looks to have a fair chance of succeeding. Here's the current list of loans from me that are pending and the day in December when the applications were completed:

Still being processed: 22, 25, 29, 30, 31
Accepted: 22, 23
Earlier, accepted only: 1 7 loans, 2 4 loans, 3 4 loans, 4 4 loans, 5 6 loans, 6 3 loans, 7 2 loans, 8 2 loans, 9 5 loans, 10 2 loans, 11 3 loans, 14, 15, 16 3 loans, 17, 18.

I'm one of those who doesn't agree that it's an excessive amount of time. I'm not at all unhappy with that application from the 22nd, which is probably still getting the supporting documents or facts obtained during the postal delays around the holiday season. Shipping pay slips and whatever else around takes a few days. If an employer needs to be checked and the boss is on holiday, that can take longer still. Such is life.

CoogarUK wrote: »

Zopa later acknowledged the situation in a weekly email and took on an additional underwriter.

Zopa mentioned an unusual surge of applications that were taking longer than usual to process, not any change to normal underwriting practice and how long an application could take to complete. Your grumbling seems entirely irrelevant to this, unless you somehow caused the increase in applications. Zopa is still showing an ad for a new junior underwriter, so it appears that Zopa is anticipating the likely increase in business this year.

Your complaining about time to complete didn't seem to vary based on load but seemed and still seems more directed to how long the longer cases can take. Since most people are happy with the occasional case taking a while I don't see much chance of a change in this - lenders tend to be more interested in maximising their chance of money getting lent out.

It's not surprising that someone who lends as you do would be irritated by finding your money tied up in loans that have applications that take a while to process but just about everyone else doesn't care because for every one they have that takes longer they will have nine that take the more usual times.

CoogarUK wrote: »

And yes, it is also true that I was rude to a moderator in a pm, but only after said moderator had taken to systematically deleting many of my posts, all of which were relevant and on topic.

Please don't be rude to moderators. They get more than enough grief as it is.

If I recall that discussion it was one where you were continuing as usual to discuss your perennial desire to have Zopa cut short processing time and hence decline applications that could succeed by not giving enough time for the fact checking. That grew tiresome through constant repetition long ago so it's hardly surprising that moderators would ask you to cut down on the frequency. Moderators are supposed to do things like this.

If you want to more successfully raise the topic, do so less frequently with a summary of processing time per application that you've seen.

CoogarUK wrote: »

Zopa likes to consider itself an 'open society' but in reality that is quite some way from the truth.

Zopa is a business. So is MSE. If you expect anything else you're kidding yourself. On the other hand, I've done things like (wrongly) insult Zopa's UK CEO (and apologise in public and private) and post data about things that Zopa considers to be a trade secret without getting any grief over it. Then there's those posts I made saying that I thought Zopa was a bad deal for lenders, which I'm sure Zopa didn't really welcome. I no longer hold that view, since it's clear that there are times when the returns can be worthwhile.

CoogarUK wrote: »

Today they quote a headline annual return for lenders of 9.1% ... To describe that as misleading would be somewhat of an understatement!

What they are saying is "over the last 12 months our lenders have made an annual return of 9.1%".

Based on what I've seen that appears to be an accurate description of the returns received by lenders after bad debt and Zopa fees have been deducted.

While now isn't a great time to be lending, the generic rates quoted to borrowers yesterday were 7.3%, 7.7%, 9.2%, 11.4% and 12.1% in A*, A, B, C and Y 36 month markets for 5k. On 27 August those same markets were quoting rates of 10, 10.6, 11.6, 13.5 and 14%. Deducting 1% for Zopa fee and actual bad debt rate (assuming older lender paying 0.5% fee and 0.5% actual bad debt) it should be clear enough that 9.1% for the year is likely to be accurate.

I'm expecting to do better than 9.1% for new loans taken out over the next three months, a time that's usually a good one for lenders at Zopa.

Of course, that means that after about the middle of this month I expect it to be a time when the current quite low rates will no longer be available to borrowers, though I do expect borrowers to still get low value loans more cheaply than from places like NatWest.