P2P Money Blog

Zopa have today announced some changes to their lending process.  The most significant change is the increase in borrower exposure from 0.5% to 2%.  The effect on lenders would be small, and although individual diversification would be increased, the safeguard fund backs individual loans.  This change would, however, allow Zopa to fund up to 4 times as many loans with the same lender capital as before.

One of the other important changes is that repayments would be prioritised over new capital, and this would mean that existing lenders would achieve returns closer to predictions as their would be less "dead time" - time when funds are sitting in a lender's holding account not earning any interest.

Here is Zopa's full statement:

We wanted to make you aware of some key improvements we’re making to our loans matching engine over the coming weeks. Here is a quick summary but you can find out more information on our blog.

Phase 1 - Maximum exposure change

This week we’ll be adjusting the maximum exposure of how much you lend to each borrower from 0.5% to 2%. This enables us to allocate more of a lender’s money to each loan and allow funds to be lent more quickly, whilst still providing a good level of diversification.

Phase 2 - First in first out lending (FIFO)

Over the coming weeks we will be changing the queuing system to separate out new funds from repayment funds, with repayments being matched first. This allows existing funds to be matched more efficiently and allows us to give an accurate prediction of when new funds will be matched.

Phase 3 - End of day matching

In the following weeks we will begin matching loans in one process at the end of each day. This will mean that all our lenders will receive a more consistent blended rate, regardless of lending size in any given day.