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Recent Movements In The 4thWay PLUS Ratings
The 4thWay PLUS Ratings and 4thWay ALT Ratings have been showing their worth during the pandemic and we strongly expect they will continue to do so.
P2P lending doesn't evolve around the world of COVID-19, though, so there have been a few changes to 4thWay PLUS Ratings in recent weeks for more mundane reasons.
Kuflink receives the top rating
Kuflink*. has just become the latest P2P lending company to supply enough information, and have a good and long enough history, to receive a 4thWay PLUS Rating. All its accounts are rated 3/3, “Exceptional”, due to their strong defences against losses while paying highly satisfactory interest.
It's done this at an extraordinary time. In our stress test of its complete book of loans, we assumed that its results up to today are “normal”, when in fact its pandemic time. Even taking result today as a baseline as if we're not going through a pandemic, and assuming that all loans that are late or have received forebearance due to COVID-19 turn into actual bad debts, and then assuming a severe recession and property crash on top of that, our stress tests show that lenders using Kuflink can still expect to make a profit overall. That's quite impressive.
We're grateful to Kuflink for opening up its full data to us so that we could run these banking style stress tests.
Spread your lending across many loans in Kuflink accounts and you can expect robust, highly satisfactory results by the time the impact of the pandemic has been fully realised. If you haven't signed up to our newsletter already, you won't have received our five top picks, which we expect to average 6% to 8% annual returns, after bad debts.
Zopa is no longer rated
We've taken the unfortunately necessary step of stopping ratings for Zopa. It provides a full picture showing the record of every loan its approved too sporadically for us to conduct all the research and checks on data voracity that we do today. If we consistently receive data, we have more opportunity to spot errors, inconsistencies or data manipulation, and we can do better models of the loans. Regular data submissions are therefore a basic requirement that all P2P lending companies must comply with in order to maintain a 4thWay PLUS Rating.
Assetz Capital maintains its ratings, but is worth a small comment regarding its auto-lend accounts, which have reserve funds.We still really wish we had even more information about its reserve funds, as it leaves us having to have a little bit of faith that the reserve fund is well funded in advance. Its manual-lending account does not have the same issues of clarity.
See the 4thWay Assetz Capital Review or visit Assetz Capital. Also, Assetz Capital was covered particularly extensively in P2P Lending And COVID-19: Lots Of News And Updates, Nov 2020.
Lending Works and LendingCrowd
Lending Works* and LendingCrowd* are currently not doing any new lending, so we have temporarily removed them from our comparison tables. We don't rate P2P lending companies unless they are doing new lending, since the ratings are meant to be an indication of the risk-reward balance at the point of lending.
Visit Lending Works* and LendingCrowd*. Read the 4thWay Lending Works Review and the LendingCrowd Review. LendingCrowd was also covered extensively in P2P Lending And COVID-19: Lots Of News And Updates, Nov 2020.
HNW Lending* was off our table while lending was paused due to both the pandemic and a request from the regulator. It's now back in business, so HNW Lending is back in our comparison table and it retains its 4thWay PLUS Ratings.
Loanpad's lending rates have come down, as we expected they would, since they were far too high for the risks involved. Lending rates will come down a tick further in December to 4% for the Loanpad Premium Account/IFISA and 3% for the Loanpad Classic Account/IFISA. Loanpad expects rates to stay at that level for the foreseeable future based on current market conditions.
Loanpad* remains the safest P2P lending company, even with the lower rates. I say that because less interest means less cover against bad debts. In Loanpad's case, I expect lenders to suffer no bad debts even during the pandemic.
Loanpad's history is still too short for a calculated 4thWay PLUS Rating, but 4thWay's specialists unanimously award it two of our alternative ratings: Hidden Gem and High Quality Secured Property Loans. These ratings remain after the rates come down again for new loans on 1st December.
CrowdProperty has completed more bridging loans in the past six months than it has done in the previous 16 months. (Prior to that, it didn't do bridging loans at all.)
Since its bridging loans are now a substantial part of its lending, we need to separate those loans when calculating CrowdProperty's 4thWay PLUS Rating.
CrowdProperty's bridging loans are too new and the history too short for us to calculate those loans, so for the time being they are excluded.
So, CrowdProperty maintains its 3/3 “Exceptional” 4thWay PLUS Rating, but the rating applies to its development loans only. That typically means, conversions, extensions and new builds.
The 4thWay® PLUS Ratings are calculations developed by professional risk modellers (someone who models risks for the banks), experienced investors and a debt specialist from one of the major consultancy firms. They measure the interest you earn against the risk of suffering losses from borrowers being unable to repay their loans in scenarios up to a serious recession and a major property crash. The ratings assume you spread your money across hundreds or thousands of loans, and continue lending until all your loans are repaid. They assume you lend across 6-12 rated P2P lending accounts or IFISAs, and measure your overall performance across all of them, not against individual performances.
The 4thWay PLUS Ratings are calculated using objective criteria that can be measured and improved on over time, although no rating system is perfect. Read more about the 4thWay® PLUS Ratings.
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 HNW Lending, Kuflink, LendingCrowd, Lending Works and Loanpad, 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.