Clouds on the Zopa Horizon?
I’ve now got over £30,000 invested in Zopa.
Nothing really untoward has been happening with my money and according to the latest figures, I’m earning a genuine five percent on my money. By a genuine five percent, I mean one that includes all the charges and bad debts. It also takes into account money that is in Zopa, but is not been lent out yet.
Of the 650 or so people I have lent to, only three are in trouble, with one a genuine bad debt and the other two limping along still making payments. That level is below the level forecast by the company and well below the levels experienced by the average finance company.
The graph below shows the rates at which money has been lent out on Zopa.
Note that since mid-April rates have been rising, but over the last month or so, they have flattened off a bit and they may even have been falling slightly.
The graph below shows the amount of money requested.
Note how over the last six weeks, the amount of money requested by borrowers has dropped significantly.
Is this and the drop in interest rates linked to the banks being easier places to borrow money or does it reflect a typical lack of business because of the summer holidays? You could argue that the peak in June/July was caused by people borrowing money for holidays or new transport to take them there!
So there could be some fluffy cumulus on the Zopa horizon. We’ll see if business takes off in the autumn.
But a bigger thundery cloud has been seen courtesy of the Office of Fair Trading.
When I first got the letter saying that I must register because of Anti-Money Laundering Regulations, I thought it was a joke or at worst a try-on. Basically, reading the letter it just seems to be a catch-all to raise more money for this beleaguered government.
Why should I pay £115 a year, when my lending is controlled by Zopa and I only transfer money into them, by a straight transfer from my bank account? It is a yearly charge and would cut my rate from five to 4.7 percent.
If every lender on Zopa had to pay this tax, then it would not be the place for lesser mortals to get a decent rate on their money. But then Prudence and his ilk, have never liked private enterprise. Unless of course it benefits themselves!
It could be argued that Zopa is also a competitor to the various State Banks, that Prudence has saddled us with.
But despite all these clouds I will still be putting a percentage of my spare money into Zopa in the future.