Did The Government Dither Over Northern Rock?
Sir Nicholas Macpherson was the senior civil servant in the Treasury, when Northern Rock ran into difficulties. He has just appeared before the Treasury Select Committee and there is a report here. This is the first paragraph.
The Treasury’s most senior civil servant has told MPs the government should have been quicker to nationalise Northern Rock following its collapse.
It doesn’t appear to me, that the government appeared to act quickly at all.
Perhaps, Gordon Brown was just being too prudent!
On the other hand, I’ve done financial modelling with loan companies and know that if you decide to run them down collecting all the payments aggressively, you can often retrieve a bad situation.
So perhaps, they were hoping Northern Rock would all come good! It didn’t!
Remember though, the bank did employ a lot of people in Labour’s heartland. So liquidation would have been a bad option for NuLabor.
Zopa Simplifies The Markets
Zopa has today announced that instead of having five markets; A*, A, B, C and Youth, this will soon be simplified to just three, with C and Y being discarded.
Effectively this will bring it in line with what I do, as I don’t invest in the Youth market and although I’ve recently added the C market to my offer, I haven’t lent anything there yet. All market rates of late have been very stable, so my control engineering theory says hat everything should be in balance.
I think they are right to do this.
- They would now be appearing to be making a much better offer to younger borrowers with a good credit rating.
- The simplified structure makes it easier to decide your lending strategy.
- It also makes it less important to get it right on the optimum.
We shall see if they are right and business and returns improve.
Bad News From Zopa
I had some bad news today, when I was informed that Zopa don’t think one of my lenders will pay me any more money.
I lent him £20 in May 2009 at 8.9% and I’ve now lost £1.48 on the deal.
I’ll just buy one less coffee today, than I would have done!
Zopa Gets Very Stable
I’ve said before that Zopa could be a classic stable system.
Over the last three weeks, the rates I’m charging to lend out money on Zopa have hardly changed. I set them just under the top limit of the Zone Of Possible Agreement, that gives Zopa its name. The rate for the B, A and A* markets have been 7.6, 6.7 and 6.3 respectively for the last ten days now, which isn’t a bad rate.
Not bad that is, before tax and for effectively three years!
My rate this year so far is 4.58%. It’s been distorted a bit as I’m loading money into Zopa like crazy.
How Long Does It Take To Lend Out £10,000 On Zopa?
£10,000 was transferred into my Zopa account on the 23rd of August. It did take a couple of days or so to actually arrive after leaving my bank account, but then that is the bank transfer system.
Surely in this day and age, it can be an instant event!
My old mate, David, once said that banks make up to a third of their money on overnight lending. So my £10,000 for two days lent out at only three per cent, whilst in the care of the banks would make them about £1.64. Not much, you may think, but it’s pure profit and how much money is there in the system? I bet they lend it at a higher rate than three per cent too.
After the £10,000 arrived in my Zopa account on the 22nd, on the 23rd, I had £11,960.43 either offered for lending or being processed.
A week later and that figure is down to £9060.43. So effectively £2,900 has now been lent out. £9,300 in total is being processed, but some of that comes from money that has been reinvested.
So it would appear that Zopa has a processing limit.
Is This A Zopa Advantage?
Zopa doesn’t process contracts at the weekend. Or it doesn’t appear to! This might be because they have to interface with the credit agencies and the banks and those don’t work 24/7.
So with the bank holiday tomorrow, it will be interesting to see how the money I have on offer disappears. Last week I loaded my account with £10,000, so there is plenty of money there.
On Saturday morning, I had £650 being processed in 13 contracts. These will probably start being sorted on Tuesday.
This morning it was £3350 in 67 contracts.
As I write now at 22:43 on Sunday, it’s £4,700 in 94 contracts. The last of those contracts was setup about 22:15. I’m watching to see if this is the last contract of the night.
Do Zopa have a cut-off time for loans or if say you applied at 04:00, would you be taken seriously? I wonder what Warclays would say if you applied for a loan at that hour?
If Zopa does accept loan applications at any hour, that must surely be a business advantage, as well as one for the customer, as we all have those times, when we prefer to fill in forms.
I’ll finish now for a bit. but I’ll update this in the morning.
I didn’t get any more contracts last night and when I went to bed at around midnight, there were still 94 contracts.
I got up just before seven on Monday and another had dropped off, so the number was now down to 93.
As I type this at 08:00, the number of contracts being processed is now 96. So people are still applying for loans. How many other places could you apply for a loan at this time on a bank holiday morning?
The clue is in the words bank holiday!
It’s now 12:00 and the number of contracts being processed has risen to 113.
And now it’s 18:22 with the contracts standing at 140.
21:22 and it’s 151.
It’s now Tuesday morning at 11:00. None of the flood of offers from the weekend have been fully processed yet, but that queue is now at 157.
I’ve also heard from Zopa and they say that they’re a 24/7 operation as regards to applying, but that obviously processing is usually done on a nine to five basis, Monday to Friday. But they are starting to do this on some weekends.
It’s now 13:00 and the processing has climbed to 166. Of the ten grand I put in, I have just about two grand left to lend out.
It’s now 15:42 and we’re at 170. Nothing seems to have accepted and signed off yet!
It’s now 18:10 and 20 contracts have been fully accepted and signed off. I’m not sure how many were not accepted, but it can’t have been more than a few!
Thoughts On Zopa’s Rapid Return
Zopa has a system called Rapid Return, which allows you to sell on loans.
I haven’t picked up a loan through someone else wanting to pass it on for over a year now.
Judging by the rules for Rapid Return, which mean that any loan that has missed a payment can’t be passed on and looking at the statistics for my loans, I would suspect it’s not a lack of eligible loans, but more that people are holding on to their loans. And especially the good ones! They’ve no choice with bad loans.
So does this mean that Zopa is attracting a credit-worthy class of borrower? If so, that’s good news.
Did Betfair Lay Down The Model For Social Lenders?
Zopa, Funding Circle and Ratesetter, think they are unique, but did they just borrow the principle from the betting exchange, Betfair.
In all four, you can play both sides against each other, although the purpose of Betfair is different.
The same principles could also be applied to an energy exchange. Let’s say a town or an area got together and pooled their energy needs and say they wanted a particular price, which the energy suppliers could then bid for.
I don’t see too much difference.
Birthday Charity Giving
I’ve had some more positive responses on my idea for giving to charity on your birthday, which I outlined here.
It just seems to hit a chord with people, to give to celebrate another year of life, hopefully well-lived.
So I’ve now given it a name of Birthday Charity Giving. It was the only sensible name I could think using the first letters of the names of my wife, son and the late company accountant, who set me up with the good pension I enjoy.
Creating A Ratesetter Account
I have just created a Ratesetter account, as I want to see how other peer-to-peer lending sites work.
As a Zopa user for many years, I could be considered biased, but although I got registered quickly, there are some things I liked and didn’t.
E-Mail Address Based Account
All accounts, should be based on e-mail addresses. They are in Ratesetter.
Passwords
Because of my gammy left hand, I don’t like passwords where case is important, as I often get it wrong, when I use the shift key. Ratesetter insists on at least one number.
At least though they didn’t use the dreaded Captcha system beloved of so many sites.
Check Questions
They only have one question, which you setup yourself. I’m happy with that.
Addresses
I had no problems here and they only wanted my current one.
Debit Cards and Bank Transfers
Ratesetter allow both methods of transferring money to the account. I prefer the bank transfer.
But I did successfully register my account and transfer £1,000 into the account.
The Anonymous Widower 