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Post by barnsleybiker on Aug 21, 2021 18:09:45 GMT
Gasp! we are only 21 days into August and already the defaulted payments have eaten away more than half the value of the interest I should be receiving. I feel I'd probably lose less if they just put my invested money in a carrier bag out on the street? I know there's a pandemic on but things are getting more "normal" i know I should be looking at this as a long term investment and not micro-checking it monthly, but for heavens sake I wish Zopa were more careful who they lend my money to...... grrrrr!
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Post by erniec on Aug 21, 2021 19:13:12 GMT
In my experience, it’s not unusual for defaults to exceed interest in any month with Zopa P2P products.
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Post by mfaxford on Aug 21, 2021 21:57:16 GMT
Gasp! we are only 21 days into August and already the defaulted payments have eaten away more than half the value of the interest I should be receiving. I feel I'd probably lose less if they just put my invested money in a carrier bag out on the street? I know there's a pandemic on but things are getting more "normal" i know I should be looking at this as a long term investment and not micro-checking it monthly, but for heavens sake I wish Zopa were more careful who they lend my money to...... grrrrr! Around half the interest seems fairly normal for the last few months although that's not necessarily the full picture. If you've got more risky loans in your portfolio then you could expect a higher rate of defaults, but you'll also have a higher rate of interest to match so overall you should get around what's expected (assuming they got their risk profiles right). One thing I've wondered (although not looked at in detail) is whether most of the loans defaulting are from pre-pandemic (when the borrowers might have been seen as low risk) or if some are post pandemic (after Z started being more conservative with their risks). It's definitely not something to look at individual months for though. I've had some where the defaults have almost wiped out all interest (one looked like it might be negative earnings a few days before the end of the month) and then I've also had months with no defaults. At the moment August is looking like another bad month for me - although it's still got a week to recover. Of course it doesn't help that money is so slow to be reinvested (if you have that turned on) that it's a struggle to pick up many newer (hopefully safer) loans. I'm now wondering what proportion of the new (to me) loans in my loan book are real new loans and how many are sales of older loans I've picked up. Sorry for possibly spoiling a perfectly good rant, I feel the same frustration at times with Z and lack of information.
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aju
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Post by aju on Aug 21, 2021 22:43:16 GMT
Gasp! we are only 21 days into August and already the defaulted payments have eaten away more than half the value of the interest I should be receiving. I feel I'd probably lose less if they just put my invested money in a carrier bag out on the street? I know there's a pandemic on but things are getting more "normal" i know I should be looking at this as a long term investment and not micro-checking it monthly, but for heavens sake I wish Zopa were more careful who they lend my money to...... grrrrr! I agree with above, until yo see the whole period don;t right off the month. If you are in Plus only then you should expect defaults more so in the current climate i'd say. If you either stop lending or worse sell off loans then you will see a higher percentage of defaults anyway as the interest you receive falls and eventually becomes less than the defaults value. We made some sales last year and part of this year and the defaults definitely outweighed the interest received but we were expecting it. Times are tough at the moment too. We have started relending now for the last 3 weeks and monthly percentages are improving but it will take quite some time for them to build up again and there wil be more defaults along the way. The only way you can really judge is to look at the investment as a whole not as defaults on a monthly basis. Mind you its easier to say that when one is no longer committing capital but rather reinvesting winnings for want of a better term. We have had quite a few months where the interest was wiped out completely by the defaults and its hard to marry up default sales as funds are not directly assigned to specific loans as such. The best way is to just use XIRR's to check progress over longer periods. My personal view is that whilst Zopa currently only has charts for Core and Plus even then i'm not sure they are that useful. (We have considerable older classic loans which don't even get measured in the latest charts.) Not sure that helps though!
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Post by birdie on Aug 22, 2021 7:09:19 GMT
I've had quite a few negative months over the years, the last negative month was in April this year.
Steve
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Post by ingenue on Aug 22, 2021 12:41:08 GMT
Gasp! we are only 21 days into August and already the defaulted payments have eaten away more than half the value of the interest I should be receiving. I feel I'd probably lose less if they just put my invested money in a carrier bag out on the street? I know there's a pandemic on but things are getting more "normal" i know I should be looking at this as a long term investment and not micro-checking it monthly, but for heavens sake I wish Zopa were more careful who they lend my money to...... grrrrr! This is slightly tongue in cheek so please don't get too worked up, but I'm almost starting to see investing in p2p as the evil twin of investing in crypto. With crypto you can stake a relatively small sum with a potentially large upside. Whereas with p2p to be at all worthwhile you need to stake a larger sum, at risk of 100% loss, for a very modest upside.
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Post by fuzzyiceberg on Aug 23, 2021 9:13:26 GMT
'Whereas with p2p to be at all worthwhile you need to stake a larger sum, at risk of 100% loss, for a very modest upside'
Well it does partly depend on your definition of 'worthwhile'. Sticking specifically to Zopa, rather than the wider, wilder world of P2p - Zopa is in my view a relatively low risk product offering a commensurately modest return. You do need a larger sum to achieve adequate diversity of loans- Zopa used to require £1000, but now that they have reduced th edafult loan size allocated to £5 possible £500 would be adequate. Yes there is a risk of 100% loss but for that to happen either you would have to have a minimum stake and be phenomally unlucky - in the class of winning the lottery twice in a row - or it would need to be the financial end of days the like of which we have never seen, and then I suspect any Zopa stake would be the least of our troubles.
Nearly everybody will earn something reasonably close to whatever Z's actual return for the period invested turns out to be. Sure there may be greater returns with other things, but generally only if you take on greater risk. Caveat Emptor.
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Post by ingenue on Aug 23, 2021 11:03:11 GMT
'Zopa is in my view a relatively low risk product offering a commensurately modest return.'
Tinfoil hat fully deployed now, but aside from platform risk, I do sometimes worry about the appearance of some kind of internet-organised 'civil disobedience' movement where p2p borrowers agree en masse to cease repayments.
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coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Aug 23, 2021 11:41:14 GMT
Gasp! we are only 21 days into August and already the defaulted payments have eaten away more than half the value of the interest I should be receiving. I feel I'd probably lose less if they just put my invested money in a carrier bag out on the street? I know there's a pandemic on but things are getting more "normal" i know I should be looking at this as a long term investment and not micro-checking it monthly, but for heavens sake I wish Zopa were more careful who they lend my money to...... grrrrr! This is slightly tongue in cheek so please don't get too worked up, but I'm almost starting to see investing in p2p as the evil twin of investing in crypto. With crypto you can stake a relatively small sum with a potentially large upside. Whereas with p2p to be at all worthwhile you need to stake a larger sum, at risk of 100% loss, for a very modest upside. Regular readers will know that p2p hasn't floated this small private investor's boat for some while now, the risks now far outweighing the returns in my view.
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trium
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Post by trium on Aug 23, 2021 13:22:57 GMT
Personally I expect to lose 40%-50% of interest to defaults every month (100% invested in Plus)
When I first started investing in Plus (2017) they were matching to produce gross returns of 11%, reducing to 6% after expected bad debt. It would have been unreasonable to expect sustained losses of less than around 45%. They no longer provide the gross figure they're matching to but you can derive your personal recent gross lending rate from your loanbook and compare it to the net figure they give in the weekly update, thereby inferring how much bad debt is to be expected.
I find that BD has been a little lower than expected recently, which I assume is due to loans going into forbearance when they might otherwise have gone into default. Obviously, that may be storing up nasty surprises for the future.
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Post by mfaxford on Aug 24, 2021 8:25:01 GMT
One thing I've wondered (although not looked at in detail) is whether most of the loans defaulting are from pre-pandemic (when the borrowers might have been seen as low risk) or if some are post pandemic (after Z started being more conservative with their risks). So looking through the loanbook CSV file 29 defaults in 2020 (6 before lockdowns, 23 after) only 1 of these is from post lockdowns 36 defaults in 2021 (so far) only 5 from post lockdowns. Of the 6 Loans made during covid that have defaulted two are marked Deceased and four Defaulted. Of course it's still early days to see how good Zs risk profiling is for pandemic loans but as an initial view that doesn't seem too bad. Notes:
Defaults based on having a Default date (which includes status of Deceased, Defaulted and Settled)
For Covid/Lockdowns I've based on before or after 1/4/2020 for ease of scanning dates).
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Post by overthehill on Aug 24, 2021 9:27:36 GMT
One thing I've wondered (although not looked at in detail) is whether most of the loans defaulting are from pre-pandemic (when the borrowers might have been seen as low risk) or if some are post pandemic (after Z started being more conservative with their risks). So looking through the loanbook CSV file 29 defaults in 2020 (6 before lockdowns, 23 after) only 1 of these is from post lockdowns 36 defaults in 2021 (so far) only 5 from post lockdowns. Of the 6 Loans made during covid that have defaulted two are marked Deceased and four Defaulted. Of course it's still early days to see how good Zs risk profiling is for pandemic loans but as an initial view that doesn't seem too bad. Notes:
Defaults based on having a Default date (which includes status of Deceased, Defaulted and Settled)
For Covid/Lockdowns I've based on before or after 1/4/2020 for ease of scanning dates).Apart from the exit lobby at LW, I'm no longer invested in unsecured personal lending, stack them high and sell it cheap, rates are too low and variable for the risk, defaults and dead money accumulate, not enough alignment between the platform and the lender.
Are you receiving the projected returns ? 4.0% is a ceiling but 2.0% isn't a floor. What about the capital in the defaulted loans, how much is recovered and how long does it take ?
" Projected return range
2.0% - 4.0%
We expect 95% of customers to achieve a return of at least 2.0% (after fees and losses). A middle-performing investor should expect to earn 3.2%. "
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Aug 24, 2021 10:25:38 GMT
So looking through the loanbook CSV file 29 defaults in 2020 (6 before lockdowns, 23 after) only 1 of these is from post lockdowns 36 defaults in 2021 (so far) only 5 from post lockdowns. Of the 6 Loans made during covid that have defaulted two are marked Deceased and four Defaulted. Of course it's still early days to see how good Zs risk profiling is for pandemic loans but as an initial view that doesn't seem too bad. Notes:
Defaults based on having a Default date (which includes status of Deceased, Defaulted and Settled)
For Covid/Lockdowns I've based on before or after 1/4/2020 for ease of scanning dates).Apart from the exit lobby at LW, I'm no longer invested in unsecured personal lending, stack them high and sell it cheap, rates are too low and variable for the risk, defaults and dead money accumulate, not enough alignment between the platform and the lender.
Are you receiving the projected returns ? 4.0% is a ceiling but 2.0% isn't a floor. What about the capital in the defaulted loans, how much is recovered and how long does it take ?
" Projected return range
2.0% - 4.0%
We expect 95% of customers to achieve a return of at least 2.0% (after fees and losses). A middle-performing investor should expect to earn 3.2%. "
I'm getting a bit over 4% (mainly in Plus) probably about 10% recoveries but that eventually factors into the 4% return (Z are doing periodic debt sales as well as normal recoveries, so hopefully defaults don't hang around forever) + remember you have tax offset on losses (on non-ISA). The main problem is you can no longer keep fully invested, very slow deployment, so I am removing excess funds.
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mogish
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Post by mogish on Aug 25, 2021 15:32:10 GMT
I have been re investing for the last 6 months or so in Core , expecting this to be slightly less risk.
Today my balance is £6 less than last month , (taking late payments , qued cash etc in to account) so I called to discuss.
The young lady was very vague on answering my questions and eventually said it may be a loan thats defaulted sending my balance less. I sthis normal? She also commented that even with reinvestment of funds , I can still be buying poorly performing loans!
Maybe I misundertsood but I believed I was investing in new loans in core that met zopas new and stricter lending criteria. This seems not to be the case.
Can someone please explain before I finally give up on p2p completely. After spending nearly 3 hrs over 3 days with AC trying to get a "software" issue fixed to allow transfer from ISA to cash account , im starting to wonder if this hassle is worth it.
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trium
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Post by trium on Aug 25, 2021 15:54:28 GMT
The option not to buy second hand loans was removed some years ago. The constraint that loans which have been in arrears cannot be traded was also removed some time back.
I'm afraid with modern Zopa it's a case of give them your money and leave them to it.
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