Join other 4thWay HNW investors: harness your combined power for an even better deal.
Same loans, higher rates, more loans, risk guarantees. Join now for free!
Does Landbay’s £1 Billion Deal Affect You?
Landbay has just announced that a “major financial institution” will lend another £1 billion through it. Landbay has previously arranged over £300 million in loans, with most of that coming from regular lenders.
I asked Landbay* some of the key questions that our experts at 4thWay use when gathering information about institutional lending.
Here is the Q&A:
Q: What is the name of the institution?
A: Unfortunately, we cannot disclose the name of the major financial institution.
Q: Over what time period are you targeted/roughly expected to have lent the full billion by?
A: We would expect to deploy these funds over the next three-year period, and can renew the agreement subsequently with mutual agreement.
Q: Will the institution lend in loans with precisely the same characteristics and criteria as P2P lenders?
Q: Can you tell me anything about the interest rates the institution will be earning?
A: Institutional funders receive the interest rate for the individual loans and are charged servicing and performance fees by Landbay. I cannot disclose these fees for commercial reasons.
Q: When it comes to loans that meet the same criteria you use for P2P loans, how are the loans allocated to the institution or to P2P lenders?
A: Landbay has a carve out [for individual lenders] with all of our institutional funders enabling us to allocate loans to [individual lenders] whenever there are funds available for investment. As such the allocation is randomised based on demand.
Q: Does the institution get to review and turn down individual loans?
If a loan does not meet our criteria it is simply declined – there is no concept of selection or reallocation between [individual lenders] and institutional.
Q: Do you expect your lending criteria for P2P loans to change in any way as a result of the higher number of loans you will be approving?
Landbay’s lending criteria for both P2P and institutional loans will continue to evolve but not specifically related to the higher volumes that we will see from this funding. We are in a growing segment of the market…Landbay has maintained default rates of 0%, showing our commitment to lending quality during a time of scale and we are focused on maintaining this track record.
The bottom line?
It looks like there's no cherry picking the best loans for institutions, since they get loans allocated like anyone else.
The scale of lending can impact quality, but £1 billion over about three years is little compared to the overall market for these loans. I think this lending will be of no impact to individual lenders, except perhaps to offer a little reassurance that a “major” institution is trusting Landbay.
Independent opinion: 4thWay will help you to identify your options and narrow down your choices. We suggest what you could do, but we won't tell you what to do or where to lend; the decision is yours. We are responsible for the accuracy and quality of the information we provide, but not for any decision you make based on it. The material is for general information and education purposes only.
We are not financial, legal or tax advisors, which means that we don't offer advice or recommendations based on your circumstances and goals.
The opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by ESMA or the FCA. All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.
*Commission, fees and impartial research: our service is free to you. 4thWay shows dozens of P2P lending accounts in our accurate comparison tables and we add new ones as they make it through our listing process. We receive compensation from Landbay and other P2P lending companies not mentioned above either when you click through from our website and open accounts with them, or to cover the costs of conducting our calculated stress tests and ratings assessments. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.