P2P Money Blog

RateSetter has provided a positive statement about their provision fund which is used to repay lenders where the borrower defaults.  RateSetter currently has the lowest default rate of any comparable peer-to-peer provider and with the added protection of the provision fund, no lender has lost any money due to defaults.

Here is their statement in full:

The Provision Fund has grown steadily over the last year which is testimony to the work of the RateSetter credit team and good news for our lenders. We have decided that it would be premature to declare a Surplus because we do not think the Fund is excessively capitalised and because at this relatively early stage of a growing loan book we feel it would be wrong to deplete the Fund. The Fund has so far met every claim and we will always act prudently to keep up this record and increase the level of protection for RateSetter lenders.

Also, we have incorporated a company, RateSetter Trustee Services Limited, to act as the trustee for the Provision Fund. The previous trustee was RateSetter Trustee Limited. We have updated the Terms and Conditions to reflect this. This change has no impact on how the Fund works.

There is still a £10 bonus if you sign up to RateSetter through the P2P money cashback site.

The Estonian peer-to-peer lending service isePankur.com has launched a service allowing European lenders and global institutional investors to invest in loans originating in Estonia.  Lending is denominated in Euros and can be as little as €5.

isePankur.com launched in 2008, three years after Zopa started peer-to-peer industry.  Lenders at isePankur enjoy annualised returns of over 18% since 2010.  The rapidly growing company has been acknowledged as the “Best Estonian E-service of 2011” as well as a quarter-finalist at the World Summit Awards of 2011.  With a 56% profit margin in 2011, the company is one of the few profitable peer-to-peer providers in the world.

Here is the full press release by isePankur.com:

Estonian peer-to-peer lending service isePankur.com launches pan-European investment product

isePankur.com is the most established peer-to-peer lending service in the Nordics with a solid three-year track record. On average, investors have earned an annual net return of over 18 per cent after bad debts. Private investors from the European Union and Switzerland and institutional investors from across the globe can now invest into high yielding loans originating in Estonia.

‘Accessible to all’

Investors already active on other peer-to-peer lending websites or financial institutions issuing loans can now diversify their portfolios by investing in unsecured loans originating in Estonia. Investing in peer-to-peer lending loans in Estonia has multiple benefits; Lack of competition in the banking market has increased the average APR of unsecured consumer loans issued by local commercial banks to 37% p.a. This allows isePankur to provide borrower’s access to considerably lower interest rates and investors the opportunity to earn market-beating returns. With Estonia being part of the Eurozone and SEPA (Single European Payments Area) funds being cheaply transferred to and from isePankur in two banking days, this makes this product accessible to anyone.

Pärtel Tomberg CEO of isePankur said:

“We have worked for nearly two years to establish a legal and operational framework that allows anyone across the world to invest on isePankur. This international diversification is unique to us compared to other peer-to-peer lending services as it allows investors to benefit from the different interest rates across the Eurozone. Additionally this will be the first time that private investors can invest directly in Estonia without committing large amounts of money”.

The average annual net return on investment over the last two years has been 18.07% after bad debts. The low minimum investment amount of 5 euros allows wide risk diversification. A thorough background check is conducted on each loan applicant (income & employment verification, credit check, cash-flow analysis) resulting in a low bad debts in relation to the gross interest. The debt collection process is very quick and highly effective as isePankur takes each loan which has been overdue for more than 60 days to court on its own expense. The entire debt collection process can be monitored by investors through a tracking system.

All loan and investment documents are available in both English and Estonian and all loans are issued in euro.

ReBuildingSociety, a new peer-to-business company, has launched a cashback scheme for new and existing lenders (who registered after 1st October).  The cashback is £50 for lending £1000 or more by 30th November 2012.  This offer has been listed on the P2P Cashback site.

Here are the full terms and conditions:

New Investor offer: £50 cashback when you invest £1,000 or more by 30/11/2012

This offer applies to new rebuildingsociety.com members who register after 01/10/2012 only (“Qualifying Investors”).
Qualifying Investors who transfer in money and increase their total amount invested at rebuildingsociety.com by at least £1,000 (“Qualifying Lending”) by 23:59 30/11/2012 (the “Offer period”) will qualify for a Reward.
Qualifying Lending is defined as the amount shown as ‘Investments Live’ in the user’s Investment Dashboard. The amount lent only includes bids accepted by businesses and does not include your Funds (Committed but not invested).
You can increase your lending by purchasing micro loans from other investors on the Marketplace. If you lend the Qualifying Lending amount of £1,000 by 23:59 30/11/2012 you will qualify for a Reward of £50 cashback, paid into your rebuildingsociety.com account.
Only one Reward per person and a maximum of 1 Reward per household.
In each eligible case, the £50 cashback will be paid into your rebuildingsociety.com account within 30 days of the close of the Offer Period.
There is no alternative reward to this offer.
rebuildingsociety.com reserves the right to amend, withdraw or extend any or all elements of this promotion at any time.
rebuildingsociety.com Ltd’s registered office is 20 Queen Square, Leeds, LS2 8AF, United Kingdom (Company No. 07885342).

ReBuildingSociety has been listed on the P2P Money companies page.

Encash (YES-secure) today announced that they were waiving all loan application fees until 2013.  Encash was the only peer-to-peer provider to charge individuals a loan application fee.

Here is the full text of their announcement:

Dear Members,

We are delighted to announce a fee waiver of Consumer loan processing fee of £5 and business loan processing fee of £50 for our valued borrowers till 31st January 2013.

Kind Regards
YES-secure Support Team

This change is to try to revive lending on the YES-secure platform, which is currently down over 70% on last year.  In comparison other peer-to-peer providers have seen double or triple digit growth over the same period.  While this may try to stimulate borrowing, the issue on the YES-secure site is that there is a lack of lenders, so this may not have the desired effect.

Lets hope that lending does pick up with Encash as there have already been two casualties in the peer-to-peer sector this year.

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There has been a modest rise in bad debts between mid September and mid October for two peer-to-peer companies. Both Funding Circle and YES-secure saw an increase of 0.3% in their lifetime bad debts. This takes Funding Circle's lifetime bad debt to 1.21% but that is still 1.91% better than their own weighted estimtes of 3.13%.

YES-secure operating under the Encash brand now have a lifetime bad debt rate of 4.21%, although this is too early to draw any meaningful conclusion as the new brand has not been operating for long enough. YES-secure's old brand has also seen an increase of 0.3% in their lifetime bad debts, bringing these to a mammoth 15.89% which was more than double YES-secure's own estimates.

None of the other peer-to-peer companies saw any increase in their lifetime bad debt percentage over the last month.

After the increase in bad debts in Funding Circle, they did see a reduction in "lates" (loans that have fallen behind in repayments) by 0.52% as some of the loans went into default and others got back on track.  YES-secure still have the largest percentage of loans that are late.

While nobody likes to read about increases in bad debt, lenders should take heart that bad debts in the top 4 peer-to-peer companies (namely Zopa, Funding Circle, RateSetter and ThinCats) who arrange over 98% of all peer-to-peer lending in the UK are still well below estimates.

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