Lending Works – 18 Month Results

18 Month Results

The first 18 month results for investing through Lending Works are as follows –

Expected ROI (Annualised) 6.50%
Actual ROI (Annualised) 5.32%

The expected ROI rate is taken from the current 5 year product offering. I should note that this rate has been increased from 5.50% over the last 18 months so I wouldn’t actually expect it to be 6.50% but maybe 6.00% would be accurate. As you can see the ‘Actual ROI (Annualised)’ rate has come in a 5.32%. Now for a comparable my internal account, weighted rate (average across all current loan holdings) is 5.82%. Considering expected defaults and late payments I’m fairly happy with the rate of return and it’s falling within expectations.

Cash drag has been a hot topic in recent months, and Lending Works tried to add information on investment queue times to both the 3 year and 5 year product. While it’s always a welcome to see a platform adding more information and transparency the estimated queue times (initially 1-7 days) were criticised for being somewhat inaccurate, these have now been amended, 7-14 days and 21-28 days respectively. It remains to be seen how accurate these new estimates prove to be. For my part I’ve not experienced cash drag as I’ve not made any new deposits over the last 6 months, re-payments have been re-invested in hours not days.

Lending Works have recently announced their minimum loan part allocation is going to increase from £1.00 to £10.00, in order to reduce the administrative burden on the platform. While they claim this will have little effect on larger account holders over a £1000.00 they have acknowledged a more acute effect to smaller account holders below £1000.00. I will of course monitor the effects of this change over the next 6 months.

Company Information

Total lending on the Lending Works platform reached £157,000,000 by the end of this period, up form £130,000,000 (20.77%) on the previous period. Default rates are tricky to interpret in 6 month periods against 5 year loan terms as many defaults statistics are added to previous periods after they have pasted (this is true with all lending and P2P not just Lending Works). However it would appear default rates remain fairly consistent and are no cause for concern. Average Borrower APR rate has increased again with 2018 ending as 12.10% up from 11.20% on the previous period and currently sitting at 10.70% weighed life time average. The level of the borrower APR is intrinsically linked to the quality of borrowers as higher quality borrowers will seek out lower rate loans available to them, that said lender returns have also increased to maintain the consistent risk/reward profile for the lenders. Total lending accounts on Lending Works are now 5400 with an average account size of £22,500. (NB. Most Lending Works statistics are provided via quarterly updates so some of the data analysis for the end of this period has been done with some estimation and averaging).

Conclusion

Lending Works will remain within my portfolio for the next 6 month period as I am happy with the returns and the performance of the platform as a whole. However I will monitor closely the accuracy of the new ‘estimated matching’ tool and the effects of the £10 minimum loan part. I intend to increase my holdings with Lending Works over the next period.

Referral Link for Lending Works

This link provides a referral bonus of £100 when a new customer signs up and invests £1000 using the link (T&C’s apply). The bonus is split £50 to the new customer and £50 to Proptechfish.com, any bonuses received by this blog go towards the cost of maintaining an advert free blog and will be warmly appreciated.

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