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UK-based peer-to-peer (P2P) lending platform Zopa announced on Thursday it will lower headline lending rates by 0.2 percentage points across all loan categories, starting 8 September, 2016. Any money in the queue will be lent out at the new rates as of the set date.
Following is a list of all new rates and their current value:
- Access will reduce to 3.3% from 3.5%
- Classic will drop to 4.1% from 4.3%
- Plus will drop to 6.5% from 6.7%
The move was driven by an environment of decreasing interest rates and the need to stay competitive, the company said. Just recently after the Bank of England cut interest rates to a record low of 0.25% from 0.5%. This is the first decrease in the past seven years.
Although it is not tied to the interest rates of high street banks, Zopa most banks and loan providers are forced by the market to set lower headline interest rates.
“ This lack of competitiveness for investors from the banks has led to a surge in new lenders at Zopa; meaning slower lending speeds and queues of, on average, 10 days in Classic,” Zopa’s statement read. “This is something we closely monitor and manage. As we are a marketplace it’s essential that we maintain the balance between borrowing and lending.”
Since its launch in 2005, Zopa has arranged more than £1.6 billion in P2P loans. In 2015 alone, the company the amount of money lent through the platform doubled to £532 million from £265 million in 2014. The average loan size is £7,300, but loans could be as low as £10 or as high as £1 million. Zopa is among the leading P2P lending websites in the UK.