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Post by zzr600 on Mar 29, 2015 12:16:50 GMT
I began investing in Zopa very soon after the platform went live and initially I was quite happy with the system of being able to set interest rates and lend to different markets. Then Zopa messed it up by taking away that facility, so one had to accept one single advertised rate.
I've since stopped reinvesting in Zopa and gradually transferred over to RS which offers more flexibility to set interest rates. I realise Ratesetter's provision fund makes it unnecessary to think of borrower risk profiles, but the early Zopa model was superior in this respect as it allowed lenders to obtain a higher return in riskier markets. The risk profile of borrowers in RS is invisible, meaning it's hard to actually judge the risk and decide if the advertised rate of return is actually fair on the lender.
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Post by GSV3MIaC on Mar 29, 2015 15:32:00 GMT
Yep, almost all platforms seem to have 'dumbed down', from the (ultimate control) model of deciding exactly who (based on their provided info) you want to lend to, and at what rate .. first step was you can pick what rate / risk band / term, but not exactly who, then you can only pick a rate for the term (RS model) and finally you can just hand over your cash and take what they offer (current ZOPA, and dare one say it, most banks and b/socs, model).
Now it may be that Joe P2P public just isn't ready for the nitty gritty detailed sort of P2P, or it may be that the bid/offer/agree model just doesn't scale very well to a million lenders bidding against a thousand loans every day. See the sort of issues FC are ducking and weaving around at the moment, with a mere thousand or so chasing 20 loans a day, and Assetz seem to have given it up (by limiting bidders to 'underwriters only') down at the level of a couple of borrowers a week.
One of my regrets was arriving at ZOPA at the point where they abandoned their bid/offer model (they had long since abandoned listing each borrower) and getting offered only safeguarded blended pap. I think they may have succeeded in snatching defeat from the jaws of victory. 8>.
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Post by davee39 on Mar 29, 2015 17:05:22 GMT
The vast majority of lenders do not like risk, self included. In the early Zopa days I worried about every late payment, even though my notional return was 12%. Today most of my P2P is in RS, a good chunk in Zopa with FC rapidly shrinking. That is my risk profile and if I could get 5% in a protected account I would. To attract less sophisticated savers the simple provision fund model is essential. The problem with Zopa is that their implementation is inferior to RS. Furthermore they are struggling to grow their market and can take several days (or even weeks) to lend new deposits. RS, of course, would love to have sight of some of that backed up cash.
There are still plenty of high risk, high interest offerings among the competition, but they appear to be aimed at the lower grade borrower and there is no significant third force among them.
As for RS I keep trying to convince myself that I have loaned enough, and then 6.8% flashes up and I am am lost...
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Post by westonkevRS on Mar 29, 2015 20:11:13 GMT
I began investing in Zopa very soon after the platform went live and initially I was quite happy with the system of being able to set interest rates and lend to different markets. Then Zopa messed it up by taking away that facility, so one had to accept one single advertised rate. I've since stopped reinvesting in Zopa and gradually transferred over to RS which offers more flexibility to set interest rates. I realise Ratesetter's provision fund makes it unnecessary to think of borrower risk profiles, but the early Zopa model was superior in this respect as it allowed lenders to obtain a higher return in riskier markets. The risk profile of borrowers in RS is invisible, meaning it's hard to actually judge the risk and decide if the advertised rate of return is actually fair on the lender. I've been investing in Zopa since the early days, albeit quite a small monthly amount (that I've reduced then cancelled because of my current position, it didn't seem right). As I worked in the industry I had an interest and thought my risk expertise was perfect for choosing borrowers. I enjoyed the "control" and the returns were superior. But the truth is this is a niche lending proposition, and would just never "scale". I make no apologies for RateSetter being a boring proposition providing a return that is a fair consideration for the risks (which I think at the moment is too high, especially considering what I believe to be the lowest risk proposition, but that's for another day... or thread....). That is the business model, and it works for us and most of our lenders/borrowers. It is a shame that such a more "control" facilitated proposition doesn't really exist anymore. But because their scale will always remain small, and that actually increases the platform failure risk. Perhaps if you called yourself an institution and had a few million £££ you could persuade a few of the platforms to let you play that game! @ westonkevRS
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spiral
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Post by spiral on Mar 30, 2015 8:50:00 GMT
It is a shame that such a more "control" facilitated proposition doesn't really exist anymore. But because their scale will always remain small, and that actually increases the platform failure risk. This is spot on and along with the Governments cheap money for banks, is what forced Zopa to change. I personally was with Zopa from the early days and although I found it totally fascinating, found it practically impossible to loan out a reasonable sum at rates I was happy with for the risk. Everytime there was some drive at getting new lenders, new people would come in and offer at what I saw as unrealistic rates. This is because once you'd had your first default, you got the realisation that this wasn't "free money" so tweaked your rates upwards whereas new members were joining and pushing rates down. By the time that I started to wind down my interest, I'd only managed to lend about £3K despite being active for about 3 years. When they introduced SG, I took an active interest again because I didn't need to concern myself with rates and risk profiles. I was then able to lend out about £10K in a couple of weeks, 3 times what I'd managed in 3 years as an "active" lender. Unfortunately for Zopa, they keep trying to mend a broken system and in doing so, appear to break it further. IMO they need to go back to the drawing board and come up with a brand new Zopa if they wish to maintain their links with non institutional customers.
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bugs4me
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Post by bugs4me on Mar 30, 2015 9:47:11 GMT
It is a shame that such a more "control" facilitated proposition doesn't really exist anymore. But because their scale will always remain small, and that actually increases the platform failure risk. IMO they need to go back to the drawing board and come up with a brand new Zopa if they wish to maintain their links with non institutional customers. I'm not convinced that Z do wish to maintain their links with non-institutional lenders. Once you allow the institutions in then it follows they are not going to play by the same 'rules' as applied to the retail lenders. Hence if you are a retail lender, then expect to be bounced down the lending queue to loan your funds out. It's probably far easier from a Z point of view to deal with one institutional lender than hundreds of smaller lenders. I can only hazard a guess as to who is getting the cream or am I being cynical.
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spiral
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Post by spiral on Mar 30, 2015 9:57:09 GMT
IMO they need to go back to the drawing board and come up with a brand new Zopa if they wish to maintain their links with non institutional customers. I'm not convinced that Z do wish to maintain their links with non-institutional lenders. I don't disagree, I'm sure they won't go back to the drawing board and therefore by my definition, don't wish to maintain their links with non institutional lenders. I for one have not lent any money over there in more than a year now.
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c88dnf
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Post by c88dnf on Mar 30, 2015 11:43:01 GMT
I have to agree with all the recent posters. I started with Zopa, but stopped investing as soon as they moved to fixed rates over which I had no control. Having lived through the 1974, 1976, 1987 and 2008 financial crises, I'm for steady, possibly not spectacular returns after inflation. That last bit often gets forgotten when returns of 10% plus in the "good old days" are being recounted.
That said, last week Zopa outsold Ratesetter for the first time in about 9 months, so they must be pleasing someone!
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Post by closetotheedge on Apr 8, 2015 15:10:44 GMT
I put the exact same amount of my savings into Zopa and Ratesetter two years ago last month. Now I do not claim to really understand the complexities of the two platforms but my interest from Zopa stands at £2317 vs £3097 with Ratesetter.
Unless I am missing the point and Zopa are accepting a different class of applicant so the risk is greatly diminished the plain fact is that Ratesetter is outperforming Zopa by £780 per year using the same 5 year criteria and starting point.
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Post by davee39 on Apr 8, 2015 15:43:05 GMT
I put the exact same amount of my savings into Zopa and Ratesetter two years ago last month. Now I do not claim to really understand the complexities of the two platforms but my interest from Zopa stands at £2317 vs £3097 with Ratesetter. Unless I am missing the point and Zopa are accepting a different class of applicant so the risk is greatly diminished the plain fact is that Ratesetter is outperforming Zopa by £780 per year using the same 5 year criteria and starting point. You probably have missed the point. First Zopa charge lenders a higher fee (whatever the backroom adjustment made to hide it), secondly Zopa competes for the very lowest risk borrowers and offers some loans at very low rates. A big bonus at Zopa is the lower cost exit fee for cashing in loans, they charge 1% and cash can be freed up quickly if needed. For many months Zopa have struggled to get growth in lending but they appear to be making progress now. I invest in both, Zopa has about 2/3 of the total I have in Ratesetter.
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bugs4me
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Post by bugs4me on Apr 8, 2015 18:05:39 GMT
I put the exact same amount of my savings into Zopa and Ratesetter two years ago last month. Now I do not claim to really understand the complexities of the two platforms but my interest from Zopa stands at £2317 vs £3097 with Ratesetter. Unless I am missing the point and Zopa are accepting a different class of applicant so the risk is greatly diminished the plain fact is that Ratesetter is outperforming Zopa by £780 per year using the same 5 year criteria and starting point. You probably have missed the point. First Zopa charge lenders a higher fee (whatever the backroom adjustment made to hide it), secondly Zopa competes for the very lowest risk borrowers and offers some loans at very low rates. A big bonus at Zopa is the lower cost exit fee for cashing in loans, they charge 1% and cash can be freed up quickly if needed. For many months Zopa have struggled to get growth in lending but they appear to be making progress now. I invest in both, Zopa has about 2/3 of the total I have in Ratesetter. Zopa have tried for a long time now to be top of the league table for low cost loans and there is the added bonus (if you should ever need it) of possibly lower exit fees. Call me cynical but once you allow institutions into the party room then effectively it's game over for genuine P2P with that platform. I doubt if any institution would accept some of the rates that Zopa pass off onto its lenders so no second guessing as to where the higher value loans are going. Then there is the lending speed at Zopa which seemed to be okay until the latter part of 2013. The institutional involvement was announced a few months later but it wouldn't surprise me that as the lending speed suddenly nosedived for individuals but borrowing was healthy - draw your own conclusions or at least I did as to exactly when that institution became involved. Once institutions get involved then I tend to take with an extra large pinch of salt the assuring statement(s) made by the platform owners about 'nothing's going to change' for us normals. It generally does. Either overall rates are lower or deal flow slows up - take your pick but things are never as they originally were even though the assurances keep on flowing like a stuck record. If the boot was on the other foot and I was an institution (which I'm certainly not) then I would expect, or indeed demand the cream in exchange for a few million quid investment. That's how business operates.
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Post by Deleted on Apr 24, 2015 13:07:04 GMT
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Post by westonkevRS on Apr 24, 2015 17:38:27 GMT
Matt, you seem to like it around here. Do you want a job at RateSetter, I'll put in a good word. Or we could get a room..... Interesting quote: " Perhaps the most surprising observation about these charts, however, is the large increase in standard deviation seen in Zopa’s loan book over the last 2 years. The timing of this coincides with the introduction of Zopa’s Safeguard fund. This could indicate a change in lending strategy as Zopa attempts to maintain its pace of growth.
Those of you who are familiar with the rates that Zopa and RateSetter offer their lenders may be surprised to see Zopa’s mean lending rate higher than RateSetter’s, (as RateSetter currently offers lenders about 150bps more yield than Zopa on its 5yr rate). However this is explained when we look at the term of the loans which makeup the loan books with RateSetter’s loan book being weighted towards shorter term loans which will tend to have lower yields." @ westonkevRS
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Post by Deleted on Apr 25, 2015 7:15:35 GMT
Didn't realise you're also head of recruitment as well, how many hats are you wearing over there these days, 3, 4?
Thanks for the kind offer but I can't rock the colour purple as well as you can so it's a no from me.
This is the tip of the iceberg in terms of the data, lots more interesting stats on actual arrears, defaults and consumer lending disbursal volumes/values, max loan terms and loan values to come out.
Good to be open and out there.
Have a good weekend all. Mat
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Post by wibble on Apr 27, 2015 8:33:27 GMT
Has there been any analysis or pretty charts of the profitability / long term forecast of Ratesetter, Zopa and other P2Ps? I'm personally perfectly satisfied with the type of loans being made, size of safety nets vs defaults, etc, but not quite so comfortable with the level of visibility over their long term viability - that to me is the biggest risk. I understand there are protocols in place that protect both lenders and borrowers if a P2P goes to the wall, but I'm not aware of this actually having to be implemented in the real world, and how those processes would stand up.
Perhaps the data analysis being discussed above will touch on that, I'm not sure.
Yes, I know accounts are filed at Companies House, etc, but I'm too lazy / not clever enough to put together such a comparison.
Apologies for taking this thread on a tangent, but seems like anything goes at the moment.
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