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Sunday, 23 August 2015

Saving Stream – Is the New Pre-Funding Option the Way Forward?

In my last post I described how massive demand for loans on the Saving Stream platform had resulted in many lenders being locked out of recent loans while greedy lenders with big pockets were snatching up everything in sight.

The Solution

I’m pleased to announce that Saving Stream have come up with a simple fix – the Pre-Funding Option.  This allows each lender to set up an amount they are prepared to invest in each new loan.  This means everyone who wants ‘in’ will get a share of the loan.  While those with big pockets will obviously get only a proportion of their pre-funding amount they won’t be able to steal from smaller bidders.

Not Perfect but ..

Like all fixes, it isn’t perfect but, with the demand for loan parts on the secondary market, anyone who has second thoughts can easily sell all or part of a share in a loan.  As with existing Saving Stream loans, you can bid without having to have the money in your SS account.  Once you know the size of loan you have been allocated you can transfer the cash into your SS account retrospectively.

I for one am happy with this solution and look forward to participating in future loans on the Saving Steam platform!

UPDATE (11 Sep 2015)

The New Pre-Funding option seems to be working well.  My first loan was scaled back significantly from the amount I offered but the second was taken up in full.  All I need to do in each case was settle up via a bank transfer once I received the email.  I love the simplicity of SS.  12% across the board and the ability to pre-bid and then pay later.  What's not to like?  

Tuesday, 18 August 2015

Saving Stream – When UK Peer to Peer Lending Goes Bad!

Until recently Saving Stream was a great site for Lenders.  It had a good reputation, simple interface, 12% across the board interest on asset-backed property loans and a fully functioning secondary market.

Hitting the Fan!

In the last few weeks, the ‘proverbial’ has hit the fan!  The number of lenders has increased rapidly and also the size of their pockets.  SS have refused to limit bid sizes (as other sites such as Funding Secure and Money Thing do).  The result is that I have been locked out of the site when the last 4 loans have come on line and have been unable to invest anything in spite of intense and futile keyboard activity. 

Evil Robots 

After half an hour or so these large loans (some over a million £) are gone because people with large pockets (or idiots) are chucking typically £50k on a single loan.  Also the secondary market now empties immediately anything surfaces on it.  This is rumoured to be partly due to the use of ‘bots’. SS have failed to prevent bot use (for example by inserting a Captcha), failed to upgrade their servers/software and worst of all refused put any limit on bid size.

Not Cricket

This is NOT what Peer to Peer is supposed to be all about.  Ordinary people with limited funds and limited technology are effectively being denied access to SS loans.  It’s like a millionaire going to the local sweet shop and buying up the entire stock.

Saving Stream in Full Flood

Hopefully SS will fix things, but right now the Saving Stream is in full flood and the infrastructure can’t cope.  Unfortunately, in the next month or so a huge pile of SS cash is being released as loans mature and many will find it difficult to reinvest in the platform.  Its classic gold rush time with too many prospectors chasing too little gold and the greedy few grabbing every nugget.

I will be monitoring SS and hoping it improves but right now I have no choice but to invest elsewhere. 

Friday, 7 August 2015

Assetz Capital Peer to Peer Lending - New Account Offers Instant Access Savings at 7% !

Introducing the Assetz Great British Business Account (GBBA)

Too good to be true?  Read on ..

Assetz Capital have just introduced a THIRD Peer to Peer Lending Account.  Until recently, they had:

  • A Manual Loan Investment Account where you build your own portfolio of loans
  • A Green Energy Income Account that pays 7% 

The Manual Account typically pays around 11% on average with a package of self-selected secured (against property) loans.  There is no protection fund.  The Green Account automatically selects green loans (wind turbines, solar etc.) for you making a balanced, protected, portfolio at a fixed interest of 7%.

The good news with the Green Fund is it is highly liquid.  In other words you can (normally) get most of your money out very quickly.

Ratesetter Comparison 

This compares very favourably with, for example, Ratesetter, where you currently get 5.9% in the 5 year market.  This is decidedly NOT liquid in that it takes 5 YEARS to get all your money back and there are heavy penalties for early withdrawal.


So what about the third account, the GBBA?  This is similar in operation to the Green Account but this one offers 7% based on loans to Small to Medium British Enterprises (SME).  Like the Green Account it is protected by a contingency fund.

Some Assetz customers have been cautious about the future of Green Investment so this new fund offers a great alternative to park some cash temporarily and still get a really good rate of interest without too much risk.

Note that the Manual account includes all the Assetz P2P loans while the Green and Business Accounts each include a relevant subset of these according to the fund type (Green or Small Business).

'Hands On' verses 'Leave Alone'

While the Manual account is fairly 'hands on' and involves moderate risk, the Green and Business accounts are much safer and require virtually no management.  In other words, You deposit some cash in your Assetz account then transfer it into the GBBA.  When you want the money back you withdraw it from the GBBA and hopefully it will quickly appear in your cash account where you can transfer it back to your current account.  Tres simple!


Please note that I have no particular preference for Assetz Capital but, as other Assetz lenders have done, I have purchased a few shares in the company.  So please don't take this as a recommendation.  Make up your own mind as to whether this is a good deal for you and beware of investing too much in any single Peer to Peer platform.

As with all investing, DIVERSIFICATION is key.  Happy Lending!

Saturday, 1 August 2015

The Peer to Peer Lending Lifecycle - Where am I today?

I’ve now informally reviewed eight UK P2PL platforms that I have personal experience of so I thought it might be useful to let you know how I am doing.  My goal here is to give you a simple overview and avoid too much jargon or technical stuff.  If you check the archive you can find my posts on the various platforms.

The Beginning

I guess most people begin their P2P journey on a simple platform like Ratesetter or Zopa where you decide how much you want to invest and for how long.  RS and Zopa spread the risk for you.  These platforms are largely hands free (more like investing in a shares or funds).  The borrowers are private individuals rather than businesses.

The Next Step

The next step I made was to try Funding Circle.  This platform is more complex and allows the lender to bid in an auction for individual unsecured business loans.  By bidding, you decide what interest rate you require.  If you get this right you will end up with a high interest rate while other lenders for the same loan get a lower rate.

For example, lets assume the borrower’s target interest rate for a loan is 10%.  In practice some lenders may have bid 7% while others may bid 14%.  The rate of 10% is an average of all the offers from the pool of lenders.  The highest rate bids are eliminated as lower rate bids pile into the auction so the trick is to be ready to lower your rate during the auction but not to go lower than your own target.  It’s a bit like an Ebay auction but more complicated because there are lots of winners (but some win more than others, if you get my drift!).


As you can see, Funding Circle requires a fair bit of micro-management and is more suitable for those with some spare time.  Another issue with Funding Circle is the word ‘unsecured loan’.  A proportion of loans will go into default and recovery of debt is, at best, relatively low (partly because there is no asset the loan is secured against).  With Funding Circle, the lender takes on the risk of defaults because there is no contingency fund.

The Numbers

Let me put some figures to all this.  About 50% of my Peer to Peer pot is currently in Ratesetter where I am earning around 5.9%.  This is reasonably protected from any bad debt.   25% of my money is in Funding Circle where I am currently earning 7.9%.  This was 8.3% until recently, when two more loans defaulted.  Funding Circle estimate, based on their statistics, I should be earning 8.7%.  I‘ve actually lost £450 with (so far) only £36 recovered.  I should add my loans are highly diversified and I now never put more than £60 into an individual loan.

Onwards and Upwards with Asset-based Loans?

Where is the other 25% of my lending?  Well, I'm gradually (and cautiously!) moving more money into five of the newer, asset-secured platforms:

  • Ablrate
  • Assetz Capital 
  • Funding Secure 
  • Money Thing  
  • Saving Stream  
These pay between 10 and 14% (with no fees) with the loan being secured against property, land or other tangible assets.  The pie chart illustrates the current state of my investments. With these platforms, a reasonable amount of micro-management is required as you need to select each loan and each platform is different in the way it works.

Generally there are not enough loans available on these platforms to satisfy the demand so you need to bid for new loans as soon as they appear.  Interest rates are fixed, so the auction is much simpler than Funding Circle, you simple decide how much you want to bid for.  Note some sites have a secondary market where you can buy existing loans but, in practice, these offers are like fireflies, they disappear in the blink of an eye!

Incidentally, If you Google (or Bing) 'UK Asset based Peer to Peer Lending', you won’t find much impartial information.  Wiki is sadly lacking in information about UK Asset-based lending; which is one reason why I started this blog.  So more on Asset-based P2P lending in future posts!