Reinvestment waiting time? (Z)

Payments that are automatically reinvested aren't subject to the normal queuing times, but I would expect that cash that has been moved to holding account (due to auto reinvestment being turned off) then manually invested will be subject to the queue. 

Reinvestment is also fairly slow these days, I assume it is still faster than new money or manually reinvested money. You do sometimes see money bound for reinvestment appear in holding for a short while, probably just overnight, but I don't watch that carefully.

Reinvestment is automatically turned off if you sell loans, and you have to turn it back on manually, which has caught people out in the past.

From what Zopa have said in their emails over the last year they've changed their criteria of who they'll lend to on our behalf. From memory they put borrowers into one of 5 categories (A-E) with A being the least risky. At the start of the pandemic they effectively stopped lending to those in D and E and have since re-categorised the old A-C categories over the full A-E range.

This (and potentially other changes in what due diligence they're doing) means there's a smaller set of approved borrowers than last year of people so the supply of money (through lenders re-investing) is much greater than the demand for new loans which leads to the longer waiting times.

For someone that's still re-investing I would suspect that the loans more at risk of defaulting are those that are older, although time will tell on that front. Seeing that Zopa (as a company) did manage to survive the 2008 financial crash hopefully they've got that experience to help them through the current situation.

My bold - I agree with this in abundance about the older loans, removing funds exacerbates the effect further and in particular stopping lending aggravates it too. The effect we have in our ISA's after we stopped lending almost 12 months ago and also sold loans to limit any potential loss - we have been in Zopa a long time so we have not lost capital as yet - The defaults really do have a damaging hit on returns monthly at present resulting in some account showing a monthly negative of 2-300% loss of interest. This is not the best way to keep track though and when we have sold out completely we will have a better view of our hits. (I would point out that we are still 6k up on the deal but until we see all the lost interest in default losses we will not know how much of the interest we have forfeited.

Whether Zopa survives or not is not that clear as they are now a bank and we have quite a bit of funds in there before the rates dropped. The problem is Zopa can survive but will lenders - ok lenders surviving is not really the correct word but I can;t help thinking there will be alot of losers before this pandemic finishes with us. The recent loss of 20,000 jobs with debenhams and the rest yet to come and those already lost are definitely having an effect on the defaults being created. That said a lot our defaulters/covidaffected are still paying their bills so far. 

Waitng time for reinvesting seems to be very little short of that for new money (the latter currently 8 weeks). I lent no money at all between 31 December and 10 February, since when I have a small number of £5 loans but cash drag is around 10% and still growing. No doubt those fivers are intended to spread available loans around a bit so more lenders get to see some action but of course the weight of money currently queued overall is unaffected by the tactic.