Zopa sees surge in demand as banks fail to meet consumer interests
09 March 2011 | 9687 views | 0
UK peer-to-peer lender Zopa is reporting a surge in consumer interest as traditional banks continue to tighten credit lines and milk the spreads on interest-bearing loans.
Zopa, which is celebrating its sixth birthday this week, has passed the £125 million mark in total lending, an increase of 80% on the £70m total loan figure hit last year.
The firm says lending is now growing at more than £5 million each month, giving Zopa over two per cent of the unsecured personal loan market in the UK month on month.
The company says consumers are increasingly turning to Zopa as an alternative to traditional bank lending, lured by the prospect of cheaper deals for borrowers and better returns for lenders.
Giles Andrews, cofounder and CEO of Zopa says: "With banks continuing to inflict enormous spreads across their saving and borrowing rates, resisting pressure to better serve the country and being accused by the Bank of England Governor of routinely ripping off their customers - and all despite some of the biggest being bailed out by the taxpayer - it is perhaps not surprising that as more people hear about the person-to-person alternative, they are flocking to Zopa."
He says the average return enjoyed by Zopa lenders over the last 12 months has been 7.6% p.a. (after charges but before any bad debt). Furthermore, says Giles, the default rate on Zopa loans remains at the lowest of any unsecured loan book in the UK at just 0.7%.