Zopa, one of the largest peer to peer lenders in the UK, has announced an increase in interest rates paid to investors. Zopa currently offers two diversified investment tiers: Zopa Core and Zopa Plus. Returns have increased from 3.7% for Core and 4.5% for Plus respectively. The higher rate reflected by Plus is indicative of an increase in risk profile. Zopa said this is the first time target returns have increased since 2015
Zopa said that investors will still be lending to the same low risk borrowers but will earn a higher rate of return. The increase in interest rates should help boost investor interest in the P2P lender.
Additionally, Zopa has started taking transfers-in of pre-existing ISAs into the Zopa ISA (IF ISA) allowing existing customers to trade in their old cash ISAs to a product earning over 4% while. Many cash ISAs delivered real returns that were negative. Zopa pointed to a report by Moneyfacts that said 2017 was the worst year on record for the amount of interest paid on cash ISAs.
“In the same week as new research revealed that 2017 was the worst year on record for interest paid on cash ISAs, we’re delighted to offer investors a return of up to 4.6% for accepting the risk of peer-to-peer lending,” commented Andrew Lawson, Chief Product Officer. “Today’s increase in our headline rates reflects what our investors have been seeing for some time – higher rates of return across our four investment products.”
Since Zopa was founded in 2005, it has arranged more than £2.9 billion in peer-to-peer loans. In November 2016, Zopa announced its intention to launch a next generation bank.
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