P2P Lending marketplace Assetz Capital today announced the launch of another account type. The Property Secured Investment Account (PSIA) is marketed as a way to invest exclusively in property backed loans with automatic diversification intended to help investors spread their risk across a diverse range of lending. Every single loan considered for this account is automatically selected or rejected upon the basis of the level of property security that it offers. The loans automatically selected for investment by this account are only those that have no expected loss in the case of that loan defaulting in the future, even after any estimated recovery costs.
The target rate for the Assetz PSIA account is 5.5%. (Interest is quoted gross at the target rate, although actual returns could be lower)
Recently I opened an account at p2p lending marketplace Assetz Capital to gain some first hand experiences. Assetz Capital offers secured business loans to small and medium British SMEs. I decided to start with the 30 days access account as it is mostly hands off and deposited a tiny amount, which was credited within an hour. It currently offers a promotional target rate of 4.75% (instead of 4.25%) and allows to withdraw funds with 30 days notice in normal market conditions. Investors, who want to benefit from the promotional rate need to act now, as it is only applicable for deposits made until 11.59am on 6th June 2017 and is valid for a maximum of 90 days from the date of the deposit.
Assetz Capital has a minimum investment amount of 1 GBP. Assetz is open to international investors, but a UK bank account is required. If you do not have one, I suggest opening one at Transferwise. (UPDATE: but do check comment below this article, also see my Transferwise Borderless account article). All Assetz Capital (except the MLIA) investment accounts are protected by a provision fund. There are no fees for investors.
Assetz Capital says the 30 days access account is extremly popular with investors. Since the promotion offer was launched 7 weeks ago, 23 million GBP have been deposited in this account. Assetz also offers a quick access account with 3.75% target rate, designed to provide immediate access to cash, in normal market conditions, for investors. Currently 19 million GBP are invested in this account. Further account types are the ‘Great British Business Account’ (GBBA) with 7% target rate, the ‘Green Energy Income Account’ (GEIA) with 7% target rate and the ‘Manual Loan Investment Account’ (MLIA) with 5.5% to 18% gross rate. See comparison of Assetz accounts. Assetz also features a secondary market without fees providing liquidity.
The table lists the loan originations of p2p lending marketplaces in May. Funding Circle leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 500 million Euro. This is over 10% higher than the previous month and that despite the adverse effect of the pound taking a dive. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Paskoluklubas.
Milestones reached this month are:
Assetz Capital crosses 250 million GBP lent sinch launch
Lendinvest reaches 1 billion GBP in origination since launch
Table: P2P Lending Volumes in May 2017. Source: own research
Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations. *Prosper and Lending Club no longer publish origination data for the most recent month.
For investors, that considered using the Lendy platform, but have not yet signed up, now may be a very good time to do so, as Lendy is offering 50 GBP cashback to investors that invest at least 1,000 GBP on the condition that this amount stays invested for at least 3 month. Lendy lists bidge loans secured by commercial property. The interest rates are typically in the range of 7% to 12% and the loan duration is typically 3 to 12 months. Currently a lot of loans are offered on Lendy’s secondary market, which will allow easy diversification into several loans upon signup.
Lendy is open to international investors. While a UK account is not mandatory, I suggest opening a UK bank account online via Transferwise – this will make things easier, if multiple UK marketplaces are used (my article on Transferwise Borderless account).
Property based p2p lending marketplace Proplend will launch its IFISA offer on May 30th at 9am. Initially the IFISA product will only be made available to those existing investors that had signed up to Proplend until May 26th. The new IFISA investors will have the same choice of loans secured by income producing UK commercial property and the same 1,000 GBP minimum investment opportunities as non-ISA investors. Depending on selected tranche, which differ by LTV, the interest rates range from 6.3% to 9.3%. The Proplend IF ISA will be flexible and allow tranfers in and out.
Since launching in 2014 Proplend has facilitated 11.7 million GBP in loans and has experienced no defaults so far.
P2P lending marketplace Zopa announed the plan to roll out the new IF ISA from June 15th to existing customers with target rates of up to 6.1% and also that from December 2017 new lending will not be subject to the Safeguard Fund.
Investors in Zopa Core will lend in the same risk markets as Access and Classic (A*-C) but will not be covered by the Safeguard fund. Zopa Core will offer a higher target return of 3.9% after fees and expected credit losses, as compared to 3.7% and 2.9% for Classic and Access.
The Classic and Access product offers will no longer be available for new customers, but existing customers can continue to lend through these products until 1st December, when they will be retired.
The Innovative Finance ISA (IFISA) will be launched in four phases: 1. The first stage (from 15th June) will be focused on existing customers who want to open a new IFISA (limit of 20,000 GBP) and lend through Core and Plus. 2. The second stage (1st July 2017 to 31st July 2017) will enable existing customers to sell their current loans and re-purchase similar loans in an IFISA wrapper. This will allow investors to retain Safeguarded loans in the IFISA. Any investing through new lending, or relending as capital is returned, will be onto Plus or Core only. 3. The third stage (from August 2017, but dependent on meeting demand for new IFISAs) will allow existing customers to transfer existing ISA investments with other providers to Zopa. 4. And finally, once we have met demands of existing customers, we will welcome investments from new customers.
From December 2017, new lending will not be subject to Safeguard. All loans that currently have this coverage will continue to receive it.
Zopa today says it initially introduced Safeguard in 2013 to deal with a tax anomaly that unfairly penalised peer-to-peer lenders. The fund was designed to ensure that investors only paid taxes on the net income they received from Zopa borrowers: and not bad debt. In 2015 the tax laws were updated enabling investors to claim for relief on losses from bad debt. As a result, the primary reason for Safeguard was removed. However in 2013 the Zopa website claim differed: ‘Zopa has created the Safeguard in order for you to get back all your money plus interest – without having to worry about a borrower paying you back. The Zopa Safeguard was created to step in and give you back all the money owed to you.’
Last year, based on customer demand, the company introduced Zopa Plus product without Safeguard coverage. Plus has proven popular and since March 2017 Zopa have been operating a waiting list for new investors due to the very high levels of demand. Zopa says that retiring Safeguard will allow the platform to provide greater target returns than Access or Classic (2.9% and 3.7% respectively, versus 3.9% in Core and 6.1% in Plus).
Andrew Lawson, Zopa’s Chief Product Officer, said: “We’re proud of our 12-year track record of prudent lending and have always provided positive returns to our customers. Safeguard was introduced in 2013 to deal with a tax anomaly that had led to peer-to-peer lenders being unfairly penalised. Since winning our campaign to change the tax rules, we no longer need Safeguard – as customers have proved by flocking to Zopa Plus. Now it’s done its job, retiring Safeguard, allows us to provide greater expected returns to our investors (because on average we over-fund Safeguard) whilst making the investor products even easier to understand. We’ll continue to maintain Safeguard for the rest of its life, and continue to build on our reputation for world-leading credit risk management.â€
