The Anonymous Widower

Zopa and the Election

I am an inveterate analyser of data.  After all it’s what I’ve done since I was about seventeen and I successfully explained the shape of the response I got when a small ferrous inclusion in a copper wire passed through an electromagnetic coil.  

That was forty-five years ago.  

So can all the data I’ve got from Zopa be used to explain how people feel about the election and show how Zopa is affected by what is going to happen on May 6th?  

Here’s a graph of my returns since the start of the year.  

Zopa Returns - 2010

The four lines on this graph are.  

• The rate at which money is lent out in the A* Rate.
• The return on money in Zopa over the last six months.  This takes account of any bad debts.
• The return on money over the last year. Bad debts as before.
• The return on money over the last year, adjusted for arrears. Bad debts are accounted for and if arrears are greater than a year ago, they are counted as bad debts.

Taking the last three it would appear that things have changed since the election was announced, as they have all dropped and then recovered slightly.  This is solely due to an additional bad debt, caused by the death of the borrower. No system can take care of that very sad event. 

Probably the best measure of the return is to look at it in the middle of the month.  Today is the 13th, so the return on money over the last year is 5.42%, 5.35%, 5.38% and 5.18% for the last four months.  So it has dropped 0.2% because of that bad debt.  If that is eliminated then the return for April 13th would actually be 5.37%.  

So the election has done what you’d expect and had no affect, as most deals were done whilst the date of the election was not known. 

But look at the A* borrowing rate. 

If you look at the graph, you’ll see that the rate often drops around the 5th to the 10th of each month.  This is probably because most loans are paid around the turn of the month and the effect of that money being reinvested is to drop the loan rate slightly because of the supply of money being increased. 

But this month it has dropped further than normal after creeping up slightly for the last month or so.  Perhaps the rate has increased because of high demand for money.

Could this be that as reported retail sales have been high this month and people are borrowing at a rate they trust to finance it?  Or are they worried about the new government increasing VAT?

But really there is no hard and fast evidence that Zopa is being seriously affected by the election.

I shall return to this as the elction approaches.

April 13, 2010 - Posted by AnonW | Business, Finance | Banks, Politics, Zopa