Coronavirus and your investment

The volatility seen across the stock market recently is not something we expect to see replicated to the same extent in our investment performance. At Zopa, the rate of return can vary based on the macroeconomic environment, but these changes have historically been a lot less volatile than the stock market.

This stability is because our rates of return are not directly bound to market sentiment. We offer investors a portfolio of personal loans over fixed terms. This point of difference is how we’ve been able to deliver positive returns through both downturns and upturns.

As a responsible lender, we constantly monitor external factors for any impact on our customers' ability to repay their loans. As a precaution, we have significantly tightened our lending criteria which you can read more about on this page. We will continue to monitor key indicators closely and are set up to react quickly and make changes to our lending approach as and when we need to.

We have a proud track record of providing stable, inflation-beating returns and have weathered changes in the market, regulatory environment and consumer behaviours. We will apply this knowledge to what is a fast-changing situation.

A temporary change to our lending strategy

We're able to move quickly to adjust our lending approach based on what we're seeing in the market. We took steps to temporarily tighten our lending policy and reduce lending volumes in the face of the uncertainty caused by the Coronavirus. As a precaution, we paused approving new loans that would have fallen into our C, D and E risk markets and changed pricing on our A* - B risk markets.

We now have more data with which to model and have been able to develop and implement new credit policies which are tailored to the current environment. With these in place, we feel it is appropriate to add back C risk market loans for borrowers with less exposure to Coronavirus impact back into our lending mix. This means that for investors in Zopa Core, funds can be matched with new A*- B loans and for Zopa Plus we can expand to A*- C loans.

In time, we do plan to return to our full risk market mix of A\* - E loans, but we’re not going to rush into this. We’re taking this step-by-step and will continue with our steady, data-led approach.

To avoid this affecting you returns, we have increased interest rates on A* - C loans. These increased rates reflect the uncertainty in the market and also build a significant buffer for investors. Were loss rates to see a large increase, we should still be able to deliver the advertised target returns on these loans.

How this will look

For the time being, all new loans invested in through Zopa Core will be A* - B loans. For Zopa Plus it will be A*- C. You can see the breakdown below.

Zopa Core Loans Quality April Onwards
Zopa Plus Loans Quality April Onwards
Previous Zopa Core Loans Quality
Previous Zopa Plus Loans Quality

Increased rates for new loans

The new loans that you invest in during this period will have higher interest rates, reflecting the uncertain economy. This means that projected returns for new loans invested in through Core and Plus remain the same, despite reducing the number of risk markets. The increased rates also add in a buffer that mean that even if there was a threefold rise in the normal amount of defaults we see, advertised rates would still be met on new loans.

Average interest Rates for New loans since April 2020
Projected annual returns as previously advertised

Buying existing loans from investors

You will still be able to acquire existing loans sold by other investors in the C risk market if you invest in Core and D and E risk markets if you invest in Plus. The price you purchase these loans for will be adjusted to make sure they are bought at the latest market rate.

Keeping your finances safe

Unfortunately, there have been reports of scams and people trying to take advantage of this situation, so make sure you remain vigilant to keep your finances safe. Check out the FCA ‘s latest info on how they’re supporting consumers.

And of course, keep doing all the usual good stuff, like keeping your passwords safe and being on the lookout for scammers – we have a handy blog post on this.

We’ll be here to help

If you need us, we’ll be here.

We’re following government guidelines and so Zopa has moved to company-wide home working. We’ve already tested this to make sure we can all do this effectively. Our customer service team are available to help and our goal is to ensure our service isn’t disrupted.

That said, we hope you can understand our phonelines are busier than usual. If you’d rather not wait on hold, you can contact us through live chat in the Zopa app or through the Support page. If you contact us by chat, we’ll reply instantly, or email you to let you know when we have.

In our 15 years we’ve seen a lot, including the 2007/8 recession. While this is an unexpected situation for everyone, we believe we have the experience, the tech and the people to adapt quickly and make the changes we need to continue to serve our customers through this uncertain period.

We’ll keep this page updated as the situation evolves. We ask all our customers to keep following government guidance which can be found here