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Satch

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Hmmm.

Good idea but as a lender would have to lend out at least 1% above lowest market rate and always a danger that there would be a race to the bottom.

https://www.zopa.com/ZopaWeb/default.aspx
 
Satch,

Do you mean that the lenders would have to offer 1% below (better) than market rates to make up for the 1% exchange fee you would have to pay zopa? :)

The question is whether there are any other hidden charges like with most mortgage type loans.
MIG for example, is usually 1% of the loan all by itself, then there is the application fees, etc etc....

Might not be a bad idea, but not too sure it will work without getting more exposure.
And not in this climate in the UK.

Cheers

Sparky.
 
I missed something out.

Right now you can get 5% on money put into something like the ING Direct Internet account. If they charge you 1% as a fee, then in order to break even you need to get 6%.

But some big lenders are pushing out loans to their better risk clients at 5.9% and there are a whole raft of lenders offering between 6% and 7%. Very little advantage to be had.

So to make this worthwhile given the risks involved would want to hold out for, say, 8% or higher, which means you are always going to be tending towards loans to the higher risk borrowers.

All you need is some undercutting in terms of offer rate to that borrower risk class and that could drive a race to the bottom. Great for borrowers but not for lenders.
 
I now see your point, you were discussing the merits of becoming a lender or rather the possible lack of merit (risk).

:D

Sparky
 

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