Huge changes happening with Peer to Peer platforms this month. Most of my biggest lending accounts (Assetz Capital, Lending Works, RateSetter) all reducing rates of return preceding the implementation of the new FCA lending rules coming on December 9th. More detail on each of them in the individual updates below.
Rebalancing Larger Accounts
These reductions in return rates has spurred me on to start something I’ve been threatening for several months, which is reducing my holdings in these larger accounts and rebalancing my investments. The main reason being that I really would like to reduce my exposure to any single large lender. Even though most of them I consider safer because of their size, it still doesn’t fit with my personal investment diversification rules, and if one or the unsecured lenders (like Funding Circle or RateSetter) were to go bump with over £30k, it could take with it almost 2 years worth of lending returns in one go. As the loans would be unsecured, who knows how much of my capital I would get back?
Up until now, because of the higher return rates I’ve been getting with these lenders, I’ve kind of overlooked those diversification rules as it made sense to keep taking the income while the going was good (risk/reward). Now rates are dropping significantly, I think it’s time to get back to diversifying as I should and protecting capital. I intend to bring all of my accounts to around the £10k mark which should give me plenty of diversification on £200k (+/- 5% per account).
New Lenders
The good news is that this rebalancing will free up some capital for me to add some new lenders moving forward! So look for the introduction of a few new P2P lending accounts in the coming months. It should also gradually increase my XIRR over the next year or so as many of the lenders I use with higher rates now currently have little effect on the overall portfolio because of these very large accounts carrying much of it at lower rates.
Euro Lenders
I’ve been very aware over the past few months that my investment in Euro Peer to Peer Lenders of €46k is returning more than half as much monthly as the £200k+ I have in GBP Peer to Peer Lenders returns. In fact, in November, my Euro investments outperformed my GBP investments because of very large default hits from Funding Circle (discussed later). This begs the question, why not invest more in Euro lenders? So in the coming months I’m going to start and look at changing some more money in to Euros.
Are Euro Lenders Safe?
I get emails from readers often, asking me if Euro lenders are as safe as UK lenders (because they see the level of returns they provide). The truth is; I have no idea really. In theory they should not be as safe as UK lenders because the FCA regulates UK lenders, and is (supposed) to protect lenders from the many pitfalls of Peer to Peer Lending.
In reality though, I’m not convinced this is working as it should. I think that perhaps the FCA stifles growth in many UK lenders, leading to a more difficult business environment.
As an example, Zopa (the oldest and one of the largest UK lenders) lost £17m in 2018, and currently “targets” (but does not guarantee, and rarely hits) 5.2% return rates on it’s highest paying account (with no provision fund).
Mintos on the other hand (the largest Euro lender) actually made a profit for the last couple of years, and you can see by my investments that I’m averaging 13%+ actual XIRR on my Euro investments with Mintos.
So which is better risk/reward? Zopa or Mintos?
Buying Euros
Now, I’m not suggesting you go and change all of your money into Euros as that exposes you to currency risk if Euros are not your native currency. That being said, currency diversification is a good thing in many cases. Personally I have capital and investments in USD, GBP & Euros.
If you do decided to invest in Euro lenders, please make sure you do your research, and stick with the well known lenders with a history, as indeed, there is no FCA to protect you in case of fraud or other risks. All Euro lenders do have to abide by European financial laws of course, so it’s not totally the wild west out there.
Moving On
If you would like to see individual Peer to Peer lender account screenshots from my lending accounts etc. You can click on the links next to each Peer to Peer lender update and go to the account page where you can see balances and what I’m actually invested in.
GBP Portfolio Update
Income from the GBP Peer to Peer lending portfolio was down drastically in November from £968.42 in October to £403.12. Funding Circle came in with a £476.90 loss for the month which halved the expected income. More on Funding Circle in the individual updates below.
Overall Portfolio XIRR was down a little due mostly to the Funding Circle loss from 5.81% in October to 5.59% in November. All other numbers were in the expected range. I moved more money from Funding Circle, Mintos & RateSetter to Loanpad, CrowdProperty & Unbolted. Details in the individual lender updates below.
Ablrate is one of the lenders I will need to increase my account balance with significantly as I sell out of the larger accounts I mentioned earlier.
XIRR was down a little from 13.82% in October to 13.40% in October. The XIRR on Ablrate is still high (for a UK lender). This I believe is mostly due to some secondary market loans I bid on. When bids are accepted lower than the original loan value on the secondary market, the XIRR goes up to reflect this.
I will be making some time to look at Ablrate loans and get some more significant capital dispersed in the coming weeks. The account is performing well and I don’t see anything keeping me from investing more. I’ve just been lazy putting money into lenders with auto-invest and accepting a little less returns for less time spent.
Ablrate Signup & Cashback Offers
Ablrate offer an exclusive cashback offer to readers of The Obvious Investor – when you sign-up with Ablrate and receive 0.5% cashback on your first investments.
Assetz Capital announced in November that they will no longer be allowing investment in their PSA (property Secured Account) or their GBBA2 (Great British Business Account Series 2). Current investors can remain invested in both accounts if they want to.
This move actually makes a lot of sense from a business perspective now Assetz introduced their 90 Day Access Account. The PSA currently pays a rate of 5.50% and can take up to 5 years to exit (in the event there are no buyers wanting your loans). Whereas their new 90 Day Account pays 5.75% and offers access to capital in 90 days under normal market conditions. So it makes sense that a higher rate and better liquidity should win out.
Also all Assetz Capital Loans now have asset security, so the PSA account no longer makes sense.
The GBBA2 account again has lower liquidity, and lending rates are falling across the whole credit industry, so the 6.25% may not be sustainable in the future. Thus it makes sense for Assetz to encourage investment in to their accounts with better liquidity moving forward even though the rates are a little less. The higher rates are still available in the MLA (Manual Lending Account) and Assetz have said they have no intention of changing that in the foreseeable future.
Drawdown
Personally I’ll be drawing down my account (in line with my diversification rules). I’ll leave £10k in the GBBA2 account and then invest repaid capital into the 90 Day Access account.
I’ll certainly miss the income from Assetz (they have provided a total return of £2,522.01 since I started the portfolio). Most important is to stick to the rules though and I just hope I find other lenders who are as good as Assetz Capital for the money I move.
XIRR dropped just one tick from 5.99% in October to 5.58% in November no doubt it will drop a little more as I continue the capital moving process.
Assetz Capital Signup & Cashback Offers
Assetz Capital’s last cashback offer finished on November 30th unfortunately (Booo). But they are still one of the best and safest lenders out there so if you’re considering investing with Assetz Capital, please use the link below.
CrowdProperty are a new lender I added to the portfolio in October. In short; a first charge, secured property lender with an excellent track record offering 7%-8% returns on medium term (12-24 month) loans. Rather than go through everything in this update, I decided to write an initial review here for anyone interested in taking a look at them.
After doing more research on the company, I topped up my account in November to the £10k mark. I picked up a few loans already, and I hope in November I’ll be able to get the full amount distributed into other new loans. I set up Auto-Invest with a £500 maximum in to each loan so we’ll see how that performs.
My CrowdProperty account won’t begin to show much return for the first few months as most of the loans I’m invested in don’t pay returns until the loan completes when all capital and interest is paid back. This is normal with some development loans as it allows the developer to complete the project and sell it before having to worry about large loan payments while the project is ongoing. Obviously this adds some more risk to the loans, but that’s why most are paying around 8%.
If you’re looking for higher returns, definitely worth checking CrowdProperty out. Please consider using the link below so CrowdProperty will know that I sent you.
Soooooooo, Funding Circle. What can I say. I am still waiting to sell half of my holdings with Funding Circle (and honestly, I’m now considering selling out completely). Still nothing sold since my July 1st sell order. So now it looks like I’ll also get to pay 1.25% of everything I sell (see “Selling Funding Circle Loans” below).
On top of this, as you can see in the above chart, in November, Funding Circle hit me with an overall loss of £476.90. The actual defaults for November were £676.04, in one month!
XIRR dived from 5.33% in October to 3.89% in November (as you would expect). I’m still showing an overall profit with Funding Circle at least, but we’ll see what December brings. Right now I’m just hoping to get out what I put in after fees and defaults.
I did manage to withdraw £1,500 in November (from repayments) and it all went to Loanpad where it’s safe and I can get almost 6% 🙂
Selling Funding Circle Loans
Just as a reminder from last month, Funding Circle are changing the way their selling feature works on December 2nd. Instead of sellers having to wait their turn to sell all of their loans, they are going to cycle between sellers in a “round robin” fashion, just selling parts of their loans before moving on to the next lender. So in theory, this gives everyone a chance to get some capital back quickly.
The problem is they have now introduced a 1.25% selling fee, which is going to the buyer of the loans as an incentive to purchase them. That kind of sucks when it used to be free to sell loans early, and it was the initial agreement when I first invested the money. I understand why they are doing it, however personally I think Funding Circle are making a huge mistake putting the fee onto current investments. They are basically holding investors capital for ransom and alienating them even more than they were before. Not a good idea for a company that’s not yet profitable and now has such a bad reputation already.
Funding Circle are a classic example of how greedy corporate executives can ruin a good company. I updated and wrote in my Funding Circle review how they got here.
Funding Circle Signup & Cashback Offers
For anyone considering investing in Funding Circle, I would suggest you wait and see how things pan out, there are better lenders to invest with at this time.
However if you’re a new investor, and do still want to invest with Funding Circle (bad idea), the cashback offer for new investors is: Invest £2000 and receive £50 Amazon Gift Certificate. If you are hell bent on investing with Funding Circle, you may as well get the bonus.
It really makes me sad that I have to decrease my investment with Growth Street. I must get back to, and then stick with my diversification rules though. It is simply a case of turning off auto-invest and I will have the money I need back before the end of December. I’ll be drawing my Growth Street account down to around £10k as with my other accounts.
XIRR holding steady at 5.16% (down just a tick from 5.17%). Not far from the their quoted target rate of 5.30%. Can’t beat 5.30% for only having your money tied up for 30 days at a time. I really like having that kind of access to some of my investment capital. If things get worrisome with the economy, or I just want to draw down like now. It’s just a case of switching off auto-invest and I’ll have my capital back in 30 days.
Growth Street Signup & Cashback Offers
For new investors, Growth Street have a very decent cashback offer: Invest £5000 or more for 1 year for £200 cashback.
Just a small increase in my investment with Kuflink in November which came in the form of a cashback offer. As Kuflink are above my £10k limit, I can’t send any more capital over there for now.
XIRR increased again from 6.36% in October to 6.65% in November. Kuflink still has a good loan flow coming thorough so I was able to pick up a few more loans and keep completely invested.
Check out the new cashback offer below if you’re considering investing with Kuflink. Very, very good.
Kuflink Signup & Cashback Offers
Kuflink have a wonderful cashback offer right now which is well worth taking advantage of if you are thinking of investing with them. You can get up to £4,000 in cashback bonus (depending on how much you invest).
New Kuflink customers receive the following Kuflink cashback on an investment of £1,000 or more when they use signup links from obviousinvestor.com. Must invest into loans within 14 days of first investment to qualify for cashback.
I’ll actually be increasing my investment in Landbay as I stick to my diversification rules. I actually used to have £10k invested in Landbay, but I withdrew half chasing higher returns just over a year ago. Now lenders like RateSetter are dropping their highest rate to 4%, I see no reason not to reinvest in Landbay at 3.49% as Landbay is considered one of the safest lenders out there. It’s still about 2x better than I can get from a bank right now.
XIRR is still stable at 3.46% (just under the quoted rate of 3.49%).
Landbay Signup & Cashback Offers
Landbay currently have an incentive for new investors: £50 cashback when investing £5000 or more. 1% on top of the regular number make the first year a little more attractive.
LendingCrowd monthly income is not as consistent as some other lenders, but they still deliver over time with XIRR sitting at 7.58% in November, down just a tick from 7.59% in October.
LendingCrowd are proving out over time to be one of my most profitable lenders. I’ll be upping my investment with them to get to the total of £10k diversification target. I may need to drop my lending rates a tad to keep from getting cash drag, but I’m willing to do that now.
LendingCrowd Signup & Cashback Offers
If you’re new to Peer to Peer lending and would like a shot at some higher rates; take a look at one of the last P2P lenders that still allow bidding on loans so you can get the best rates! LendingCrowd have Up to £400 cashback for £10,000 investment.
Lending Works, shocked the P2P lending market in November announcing that they are immediately dropping rates from 5% to 3.8% on their Flexible (easy access) account and from 6.5% to 5.4% on their Growth (long term investment) account. Although untimely, this actually makes a lot of sense for the safety and longevity of it’s investors. I had been reading that the “Lending Works Shield” (provision fund) had been drawing down in recent weeks due to increased defaults. Nothing drastic or worth panicking about, but I was watching it. So decreasing the rates offered to investors in return for increasing the balance of the fund to protect their capital makes a lot of sense for the longer term view and safety of the company. Lending Works continues to be one of the safer lenders out there because of this in my opinion. These guys know what they are doing.
Free Withdrawals
The other thing Lending Works did (that other lenders could learn a lot from) is to offer their current investors free withdrawals from the Growth Account (usually costs 0.5%) for lenders wanting to withdraw because of the lower rates. I took advantage of this and started to sell down my account to the target £10k balance. The total sale happened in a couple of hours (£23k) and my money was ready to withdraw at no cost.
I’m REALLY sad to be moving capital from Lending Works but need to stick to the new diversification rules. I was trying to convince myself that Lending Works and Growth Street should be exceptions to the rules, but then what of Assetz Capital whom I consider to be just as safe? 18 months ago I would have put Funding Circle as being almost (but not quite) as safe as these other platforms, and look at what’s happening there. All due mainly to Funding Circle Executive’s dumb decisions rather than the economy or lending in general. Although I doubt it, I guess something similar could happen to any of the other lenders if Executives get greedy and make dumb decisions too. So better safe than sorry.
Lending Works XIRR decreased just a bit from 5.86% in October to 5.82% in November. This will obviously continue to decrease now due to the new target number of 5.4%.
Lending Works Signup & Cashback Offers
If you decide to invest with Lending Works (which if you’re getting in to P2P, is a sensible idea as part of a diversified portfolio).
Loanpad are doing great and I’m getting more confidence in them as I get to know them better. I sent over another £4k to Loanpad in November. Unfortunately I actually made a mistake by doing this. I had forgotten that I had moved money early in the month from Funding Circle to Loanpad. So when I withdrew capital from RateSetter, I ended up sending another £3k over which put my balance up to £11k. So now I have to withdraw £1k to be at the £10k diversification limit. Oops 🙄
Loanpad XIRR is down a bit in November to 5.86% which is still excellent for a lender who offers 60 day free access to capital. That return number is on a target return suggested by Loanpad of 5.00%. This is because the Loanpad target rate on the account is the actual rate you get, not taking in to consideration investing all of the returns for the effects of compounding. As opposed to the AER (Annual Equivalent Rate) given by most other lenders (both Peer to Peer and Banks/Building Societies) which estimates the rate based on all of the interest being invested back in to the account.
Loanpad Signup & Cashback Offers
Loanpad have a great cashback incentive if you’re thinking of joining:
£50 bonus if you invest into a lending account a minimum of £1,000 within 4 weeks post registration and keep this invested for 365 days.
£150 bonus if you invest into a lending account a minimum of £10,000 within 4 weeks post registration and keep this invested for 365 days.
I’m still having to withdraw capital from Mintos because GBP MoGo car loans have gone away for good it appears. Rather than sell out, I’ll just let the account draw down as it’s only at £12k now so by the end of January it should be at the £10k target anyway. Unfortunately it looks like I’ll need to keep drawing it down from there without any more GBP loans available.
XIRR actually increased a bit again from 9.56% in October to 9.62% in November. Sad to have to withdraw GBP from Mintos, but on the bright side I still have an XIRR over 13% on Euro loans and the loan flow is much better there.
Unfortunately Mintos are still saying that UK residents can no longer invest in Mintos loans for now. Hopefully that will be ratified soon.
Mintos Signup & Cashback Offers
If you are NOT a UK resident, Mintos have a wonderful cashback bonus, one of the best in fact. Mintos offer 0.50% of the value of your investments cashback for the first 90 days you are investing with them!
As I reported last month, RateSetter rolled out their new “accounts” in October. Their “Access” account which is basically replacing the rolling rate account, the “Plus” account which is replacing he 1 year and the “Max” account which is replacing the 5 year account. Rates were reduced on the Plus and Max accounts to 4% and 5% respectively.
In November, adding insult to injury, RateSetter decided once AGAIN (in less than a month) to drop rates. As of December 2nd, “Access” will still pay 3%, but “Plus” is being lowered from 4% to 3.5% and “Max” is being lowered from 5% to 4%.
So, similar to Lending Works, the move RateSetter is making is a sensible one as far as keeping the business going and keeping lenders capital safe. The problem here though is the way it was done, and the rates now are very low. They really didn’t think it through.
Mistake
Instead of making the changes all at once, and letting investors deal with the shock just the one time and offering to allow lenders free withdrawal if they wanted out, they did it in two stages. This unfortunately made them look like they don’t know what the heck they are doing.
Investors readjusted their portfolios based on the news in October, and then the new rates came out in November so they had to adjust again. On top of this, they didn’t lift the charge for withdrawing so investors had to pay the full fees to withdraw capital if they wanted out, which again didn’t go down well as you can imagine.
Many investors are withdrawing from RateSetter altogether now as they don’t see the rates attractive any more for unsecured personal loans (even though there is a provision fund).
Personally I left the usual £10k in there and withdrew the rest. For now though I will put the capital in the “Access” account at 3% until things settle down. I’ll give them a while to figure out what they are doing before I invest longer term with them.
XIRR was the same in November at 5.22%. Obviously that will be very different next month.
RateSetter Signup & Cashback Offers
RateSetter is offering £20 cashback for investing £10 (woohoo! 🙄 ).
Based on my new diversification rules, I sent over another £4,000 to Unbolted in November, which I’m really happy about (I should have done it sooner). It will take a while to get lent out I’m sure, but I’m ok with that.
XIRR up a little more in November to 8.41% which is a bit higher than their suggested target rate of 8.40%. Not too many lenders actually deliver more then they promise in this area.
Unbolted are not like the big Peer to Peer platforms such as Funding Circle or RateSetter, and I like that. I like Unbolted’s spin on asset secured pawnshop style loans, and I certainly like the 8%+ return rates.
When loans default, assets are sold very, very quickly. Unbolted typically recover more than the item was worth. The average at the moment is 117% of the loan value is recovered! I regularly get emails saying that a defaulted asset has been sold and capital recovered, and the amount has been credited to my investment account. Zero losses in almost 2 years so far. Unbolted are getting capital lent out much faster now too. See my Unbolted Review for more information on this unique lender. Definitely worth taking a look at and adding to a diversified portfolio. 8.40% is nothing to sniff at.
One last thing that struck me about Unbolted over the last few weeks: in a recession, pawn shops typically do better than in a good economy. When people don’t have money, they often need to borrow money to get by. If banks won’t lend them money, an option is to lend money against personal assets. Basically Unbolted is high-tech pawn shop, so in theory they should do just fine in a recession, if not even better.
Unbolted Signup & Cashback Offers
Unbolted just started a new cashback bonus last month! £50 cashback if you invest just £1,000 by using the the link below! Typically these cashback offers don’t last long with Unbolted as they fill up their loans very quickly. So if you’re thinking about investing with Unbolted, click the link and register, even if you’re not going to invest for a few weeks, you’ll still get the bonus if you invest within 6 months of signing up. Nothing to lose if you don’t.
November was the best month yet for the Euro Portfolio with income of €500.59. Just a note here, I had to redo the figures for October (just a few Euros) as I found I had been including cashback bonuses in the figures for Envestio. Didn’t make a huge difference to the overall numbers but I need to keep things in order.
XIRR was down to an overall 13.90% from 14.29% in October. This was due to the aforementioned error on my part, and some cash drag we are seeing with Robocash and Grupeer, plus the lower rate loans I’m picking up on Mintos.
Similar stories with the Euro lenders to the GBP lenders where rates seem to be dropping a bit. Overall though still great rates lending Euros, and as I mentioned earlier in the update, I really need to get some more Euros to lend out.
Crowdestor had the best income month yet in November. XIRR also popped back up from 12.87% in October to 13.39% in November. These small changes are really just based on when I take the readings and payments are made into the account. Some of the loan payments still haven’t kicked in yet so hopefully XIRR will rise even more down the road.
See All Account Data & Screenshots From My Envestio Account
I made a mistake with Envestio over the last few weeks. When doing return calculations, I didn’t notice they had been paying some cashback bonuses into my account. Technically of course they are returns, but I don’t usually include cashback bonuses in the return calculations as they are not sustainable. So, I readjusted the numbers and I’ll keep an eye on that moving forward. Envestio continue to increase their loan flow. Auto-invest does a good job of reinvesting the income & repaid capital in to new loans which keeps funds invested and prevents cash drag.
XIRR was reset to a more realistic 16.84% this month (because of the calculation error) which is very close to what Envestio say I’m getting with a 16.93% target rate.
Envestio Signup & Cashback Offers
Envestio have a €5 bonus for the first €100 deposit + 0.5% cashback from all investments for 270 days.
Grupeer had a bit of cash drag again in November. Not too bad and not really anything I can do about it. They did just get some more loan originators on board so that should hopefully go away now.
XIRR is still providing a very reasonable 13.62%, down just a tad from 13.84% last month.
Mintos short term loans are still hovering around 10%-11% unfortunately so that’s all I’m picking up.
This is reflected in the XIRR which decreased a little again from 14.15 in October to 13.78% in November. This is still more than the Mintos target rate of 12.79%, and who can complain at almost 14% actual returns? Hopefully things will pick up soon and we’ll start seeing some of those 16% – 30 day loans again! I like those 😀
I will need to draw down my Mintos Euro lending account to comply with my diversification rules. I’ll start doing that soon as I actually need some Euros to pay for some alterations I’m having done to the house in Portugal so the timing is good here.
Mintos Signup & Cashback Offers
Mintos have a wonderful cashback bonus, one of the best in fact. 0.50% of the value of your investments cashback for the first 90 days you are investing with them!
Robocash XIRR dropped a bit again from 12.65% to 12.62% in November. Still getting a little bit of cash drag here but it is still a bit better than the lender target rate of 12.00%, so no complaints.
Swaper XIRR keeps creeping up slowly towards the lender provided target rate of 12%. XIRR rose once again from 8.89% in October to 10.21% in November. This should keep increasing moving forward as repayments are invested.
Big changes in the UK market this month, and also in my portfolio. It is hard to be drawing down some of these accounts but capital preservation is paramount for me, and distributing & diversifying it between more lenders and accounts makes a lot of sense.
If you have any comments or suggestions, please email me, I’m always open to feedback!
You can always go back and look at the previous updates for more details on why I’m investing in these companies and my ongoing lending experiences with each of them.
Finally I hope the month of December goes well for everyone. I wish you all a HAPPY CHRISTMAS AND A PROSPEROUS NEW YEAR! I will update you on my P2P Portfolio investments around the same time next month (or should I say “next year”!).
Thanks for reading my blog! Please feel free to comment below if you have comments, questions, criticisms or suggestions. You can also email me if you prefer. I love feedback!
Please note, most of the cashback offers on this site are for new lenders to a company. I suggest you do your own research before investing as cashback offers change daily.
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10 thoughts on “P2P Lending Portfolio Update For November 2019”
Alan
Hi Obvious,
I enjoy reading your blog, it’s fairly similar to my own experience. However, you keep persisting with some misinformation on Loanpad. The reason that your account is returning 5.84% is NOT due to the interest compounding effect you describe. It must be due to Loanpad+ referrals, which each add 0.25% to the rate for one year.
A flat rate of 5% can only give 5.127% when paid daily and compounded. I.e. ((0.05/365) + 1) ^ 365 = 1.051267…
Thanks for the note. And I’m not sure what’s happening there, but it’s NOT due to LP+ referrals, as I am a partner/affiliate and get paid referrals in a different way. The bonuses that I’ve had there have been included as capital added (just about a hundred pounds) so XIRR will be picking that up as adding capital. I’m just using the XIRR function in a spreadsheet so I’m not sure what’s going on. Your calculations look about right though so I’ll take a look at what’s going on.
So how do you think Funding Circle lost so much [of your] money in one month? Is this a warning for P2P investments generally or an FC thing? Any ideas on the dramatic reversal this month?
Remind us of the link between FCA rules and yields dropping? Is this about beefing up the provision fund mainly you reckon?
I assume the Lending Works reduced rates only apply for the re-invested ‘fragments’going forward, rather than the existing capital on loan. I never received any notification. Has the free withdrawal offer ended? I just logged in and asked them too.
Would be great if you could write a blog post on your AblRate loan criteria. I have an account but was stumped when looking at the loans available.
Same for Lending Crowd, which has taken 3 months to lend out £500 with auto-lend…
Concerning Funding Circle – I think they defaulted a lot of the late loans prior to implementing the fees for selling to clear them out. That’s just a guess as they don’t tell us anything. It’s not really a dramatic reversal, if you see prior months I had taken some losing months. November was bigger obviously. Rumor has it that Funding Circle relaxed their lending criteria to produce more income before they went public to get the IPO share price up. Unfortunately those loans are now defaulting and investors are taking the pain. So, I don’t think it’s a warning for P2P in general, I think this was FC specific.
In my opinion, the reasons for the rate reductions in all of the big P2P lenders is twofold. 1. I think they are seeing more late payments and defaults because of the slightly wobbly economy and uncertainty before Brexit. 2. I think there is a LOT of investment capital in the P2P market right now which is bringing down borrowing rates (the old “supply & demand” thing).
The new FCA rules, in my opinion, will reduce the number of investors and investment capital available to the market, which in turn will raise investment rates in the future. When that will be, I have no idea. I could be wrong.
I’ll be investing more with Ablrate in the coming months, so I’ll update the review once I get the capital lent out.
On LendingCrowd – Do you have your auto-invest percentages set really high? I had to drop my levels a bit to start getting capital lent out again. It’s unfortunate to have to drop them, but they are still pretty darn good even at the lower rates. Loan flow has been slower the last few months too. I like to think that is because they are doing good borrower due diligence.
Interesting.
All my loan offer rates sit maybe 5% below the current average rate. 12 regions, all markets except C. Max exposure 5% per business (that’s most of my annual return gone if one defaults!). Eventually most of the money progressed down the pipe. I would prefer to choose manually I guess, but again stumped.
Actually I did pop into the loans market and grab a few good rates, as they were only asking for £20 or similar @ 9% per business, so I snapped them up without looking too closely at the business metrics. Your general criteria would be interesting to know.
I hear Jim Mellon @ Master Investor suggesting if Boris wins the pound could gain 5% against the Euro overnight. His words. I’m sitting on my hands before opening more Euro P2P accounts…
Hmm, that doesn’t round right. I have all of my auto-invest levels set .25 above the average (so if the average is 9%, I’m at 9.25%). I get outbid on some, and I’m going to have to drop that a bit I think, but I won’t go below the average. Loans will be difficult to sell if you ever want out if you do that. My main criteria is diversification. I have my auto-invest set at 0.5% for each loan (puts in £40 per loan at the moment). Personally I wouldn’t do 5%, not enough diversification. Just my opinion, obviously you do whatever you’re comfortable with.
I bought a LOT of loans manually on the secondary market when I first started investing there a couple of years ago. My criteria was – no late payments, rate anything ABOVE the average rate for the loan, the more, the better.
I tend to agree the GBP will rise against the Euro if Boris gets in (opposite if Corbyn gets in, probably down 5%). I think once Brexit is done and out of the way, the pound will be back to usual in less than a year. Just my guess. No one knows for sure.
Interesting to see Landbay pull the plug this week. I had just 5k with them for 2 months.
They have been very fair and brought forward my £50 bonus with your link, so my ‘annualised’ return was almost 10%! Not complaining. I guess the FSA paperwork wasn’t worth it for the 3% retail investors in their business. Hence the sudden return of cash to investors before any FSA deadline. Just my assumptions.
As you infer Mark, sudden decisions and about-turns from management of P2P lenders has to be factored in…
Yes, the Landbay announcement took me totally by surprise. In fact, I had just sent another 5k over there as I am redistributing my capital as you likely saw earlier in this update. They sent the lot back, along with my bonus too. So very professionally done overall.
I just saw that MoneyThing is in wind-down too this morning. Likely they thought it would be very difficult to compete with the new FCA rules if they were not doing well already.
What I am starting to see is there are not as many lenders as you would thin to put capital with. Sticking with the bigger guys with provision funds and history is probably about the best bet we have. Otherwise asset security with low LTV’s is a must.
Are you trying any other Euro lenders? I think you mentioned it in a blog post but not sure which one…
I have some cash burning a hole in my pocket and just trying Grupeer & Robocash, except that Grupeer doesn’t like Transferwise…
Any more with auto lend you are trying?
Cheers.
I’m waiting until it makes sense for me to change some more money in to Euros. Once I do, I’ll likely try Peerberry and also Viventor who seem to be solid companies. I’ve been following each of them for a while and they appear to deliver the promised returns.
As far as some of the companies not liking Wise, I have noticed this more recently, so I use N26.com for moving Euros around (free, excellent government protected Euro bank up to 100k Euros). Wise for changing them first, then move to N26.com.
As soon as I get some more Euros changes, I will be trying the two companies mentioned above.
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Hi Obvious,
I enjoy reading your blog, it’s fairly similar to my own experience. However, you keep persisting with some misinformation on Loanpad. The reason that your account is returning 5.84% is NOT due to the interest compounding effect you describe. It must be due to Loanpad+ referrals, which each add 0.25% to the rate for one year.
A flat rate of 5% can only give 5.127% when paid daily and compounded. I.e. ((0.05/365) + 1) ^ 365 = 1.051267…
Good luck with your investments.
Hi Alan,
Thanks for the note. And I’m not sure what’s happening there, but it’s NOT due to LP+ referrals, as I am a partner/affiliate and get paid referrals in a different way. The bonuses that I’ve had there have been included as capital added (just about a hundred pounds) so XIRR will be picking that up as adding capital. I’m just using the XIRR function in a spreadsheet so I’m not sure what’s going on. Your calculations look about right though so I’ll take a look at what’s going on.
So how do you think Funding Circle lost so much [of your] money in one month? Is this a warning for P2P investments generally or an FC thing? Any ideas on the dramatic reversal this month?
Remind us of the link between FCA rules and yields dropping? Is this about beefing up the provision fund mainly you reckon?
I assume the Lending Works reduced rates only apply for the re-invested ‘fragments’going forward, rather than the existing capital on loan. I never received any notification. Has the free withdrawal offer ended? I just logged in and asked them too.
Would be great if you could write a blog post on your AblRate loan criteria. I have an account but was stumped when looking at the loans available.
Same for Lending Crowd, which has taken 3 months to lend out £500 with auto-lend…
Cheers.
Hi Jon,
Concerning Funding Circle – I think they defaulted a lot of the late loans prior to implementing the fees for selling to clear them out. That’s just a guess as they don’t tell us anything. It’s not really a dramatic reversal, if you see prior months I had taken some losing months. November was bigger obviously. Rumor has it that Funding Circle relaxed their lending criteria to produce more income before they went public to get the IPO share price up. Unfortunately those loans are now defaulting and investors are taking the pain. So, I don’t think it’s a warning for P2P in general, I think this was FC specific.
In my opinion, the reasons for the rate reductions in all of the big P2P lenders is twofold. 1. I think they are seeing more late payments and defaults because of the slightly wobbly economy and uncertainty before Brexit. 2. I think there is a LOT of investment capital in the P2P market right now which is bringing down borrowing rates (the old “supply & demand” thing).
The new FCA rules, in my opinion, will reduce the number of investors and investment capital available to the market, which in turn will raise investment rates in the future. When that will be, I have no idea. I could be wrong.
I’ll be investing more with Ablrate in the coming months, so I’ll update the review once I get the capital lent out.
On LendingCrowd – Do you have your auto-invest percentages set really high? I had to drop my levels a bit to start getting capital lent out again. It’s unfortunate to have to drop them, but they are still pretty darn good even at the lower rates. Loan flow has been slower the last few months too. I like to think that is because they are doing good borrower due diligence.
Interesting.
All my loan offer rates sit maybe 5% below the current average rate. 12 regions, all markets except C. Max exposure 5% per business (that’s most of my annual return gone if one defaults!). Eventually most of the money progressed down the pipe. I would prefer to choose manually I guess, but again stumped.
Actually I did pop into the loans market and grab a few good rates, as they were only asking for £20 or similar @ 9% per business, so I snapped them up without looking too closely at the business metrics. Your general criteria would be interesting to know.
I hear Jim Mellon @ Master Investor suggesting if Boris wins the pound could gain 5% against the Euro overnight. His words. I’m sitting on my hands before opening more Euro P2P accounts…
Hmm, that doesn’t round right. I have all of my auto-invest levels set .25 above the average (so if the average is 9%, I’m at 9.25%). I get outbid on some, and I’m going to have to drop that a bit I think, but I won’t go below the average. Loans will be difficult to sell if you ever want out if you do that. My main criteria is diversification. I have my auto-invest set at 0.5% for each loan (puts in £40 per loan at the moment). Personally I wouldn’t do 5%, not enough diversification. Just my opinion, obviously you do whatever you’re comfortable with.
I bought a LOT of loans manually on the secondary market when I first started investing there a couple of years ago. My criteria was – no late payments, rate anything ABOVE the average rate for the loan, the more, the better.
I tend to agree the GBP will rise against the Euro if Boris gets in (opposite if Corbyn gets in, probably down 5%). I think once Brexit is done and out of the way, the pound will be back to usual in less than a year. Just my guess. No one knows for sure.
Good luck.
Interesting to see Landbay pull the plug this week. I had just 5k with them for 2 months.
They have been very fair and brought forward my £50 bonus with your link, so my ‘annualised’ return was almost 10%! Not complaining. I guess the FSA paperwork wasn’t worth it for the 3% retail investors in their business. Hence the sudden return of cash to investors before any FSA deadline. Just my assumptions.
As you infer Mark, sudden decisions and about-turns from management of P2P lenders has to be factored in…
Hi Jon,
Yes, the Landbay announcement took me totally by surprise. In fact, I had just sent another 5k over there as I am redistributing my capital as you likely saw earlier in this update. They sent the lot back, along with my bonus too. So very professionally done overall.
I just saw that MoneyThing is in wind-down too this morning. Likely they thought it would be very difficult to compete with the new FCA rules if they were not doing well already.
What I am starting to see is there are not as many lenders as you would thin to put capital with. Sticking with the bigger guys with provision funds and history is probably about the best bet we have. Otherwise asset security with low LTV’s is a must.
Are you trying any other Euro lenders? I think you mentioned it in a blog post but not sure which one…
I have some cash burning a hole in my pocket and just trying Grupeer & Robocash, except that Grupeer doesn’t like Transferwise…
Any more with auto lend you are trying?
Cheers.
Hi Jon,
I’m waiting until it makes sense for me to change some more money in to Euros. Once I do, I’ll likely try Peerberry and also Viventor who seem to be solid companies. I’ve been following each of them for a while and they appear to deliver the promised returns.
As far as some of the companies not liking Wise, I have noticed this more recently, so I use N26.com for moving Euros around (free, excellent government protected Euro bank up to 100k Euros). Wise for changing them first, then move to N26.com.
As soon as I get some more Euros changes, I will be trying the two companies mentioned above.
Hope that helps.