Investors can secure attractive returns via Zopa lending

As stock markets around the world plunge, private investors choosing to escape can secure very attractive returns at extremely low risk via Zopa lending.

Lending to other people through Zopa (uk.zopa.com) - the world’s first international peer-to-peer lending business - is one of the most attractive places for investors to turn as they flee plunging stock markets. Zopa lenders enjoy an average fixed rate of return of 7%, with many receiving returns of more than 10%. And the ‘downside risk’ of this alternative asset class is limited to Zopa borrowers’ default rate that since launch nearly three years ago is a miniscule 0.2%.

The additional advantage of Zopa lending is the fact that the credit crunch is making the rates offered through Zopa more and more attractive to borrowers. This is because the banks are increasing the interest rates and other charges they levy to try to recoup the gigantic losses they have made through their own overzealous exposure to sub-prime debt. As the individuals lending through Zopa have no such loss to make up, they can offer the very safe prime market borrowers that come to Zopa much more competitive rates.

The net result is that more and more borrowers are turning to Zopa, as the banks make themselves increasingly expensive to try to make up for the huge losses they have suffered. This is driving up traffic to Zopa’s marketplace, making it easier for Zopa lenders to get their loan offers snapped up more readily and faster. There has been a significant upturn in the number of people joining Zopa and quickly becoming active lenders. There has also been a marked increase in the number of ‘Power Lenders’ - those lending more than £25,000 through a Consumer Credit Act licence that Zopa helps them to arrange.

Giles Andrews, Managing Director of Zopa UK said, “The credit crunch and plummeting stock markets are both serving to boost the appeal of peer-to-peer finance at Zopa. Borrowers are getting an even better deal because banks are putting their rates up, and private investors exiting the equity markets for fear of further meltdown are suddenly discovering the UK’s most exiting new asset class – lending to carefully selected prime market borrowers. Here they are enjoying very attractive returns of 7 to more than 10% - fixed and at virtually no risk. There has never been a better time to check out what peer-to-peer finance at Zopa can do for you.”