Zopa Interest Rates: Down Today
This article is updated as and when Zopa changes its rates.
Zopa*, the “super prime” personal loans P2P lending website, has compressed its rates further today, dropping from 4% in the three-year market to 3.8%. Its interest rates for five-year loans remain at 5%.
This is the first time Zopa interest rates have changed in many months.
These are the rates after fees and expected bad debts – which are intended to be covered by a bad-debt provision fund.
How Zopa interest rates compare
To see more on how Zopa now compares to others, go to Safest Peer-to-Peer vs Savings Accounts.
Why the lower rates
But none of those other P2P lending websites have Zopa's record.
Supply and demand is the key factor in interest rates. There is a high supply of cash from individual lenders, who have learned to trust Zopa over 10 years.
Borrower numbers are growing too, but it appears they're not growing fast enough to keep interest rates still. More money chasing fewer borrowers pushes rates down.
Lenders are accepting lower interest rates because they perceive the risks to be lower.
They have good reason.
Not only has Zopa been around the longest, but it has incredibly low bad-debt rates. For nearly half a decade, losses have averaged just 0.25% per year. While Zopa could be relaxing its selection criteria a bit (see Zopa Risks & Lending Speed Rise, Rates Stable) it looks to me like there's a long way to go before we need to start to worry.
Another factor is the natural fit. RateSetter, one of Zopa's nearer competitors, would probably like to see interest rates come down to help attract more quality borrowers, but it is struggling to achieve this. Zopa has.
Lower rates might dissuade some Zopa* lenders, which will make it easier for us to get our money lent out faster.
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