Back to Zopa Blog

Change is coming…change is good

A quick heads up on an important change that is happening in a couple of weeks….

We are planning on altering the way that rates are determined for borrowers within the Zopa markets. As you might know, a borrower’s interest rate is currently determined by the rate their last lender has said they are willing to lend at. (If you want to know more, have a read of our FAQ on the matching process.) This means that many lenders receive more interest than the rate they asked for, and borrowers end up paying slightly higher rates.

We’ve decided to adapt the way the matching engine calculates rates. In the future, lenders will always receive the rate they ask for, and borrowers will pay the average rate across all their lenders. So for example, if a borrower was lent £500 by one lender at a rate of 5%, and £500 by another at 10%, his overall rate would be 7.5%, and both lenders would receive the rates they offered.

We’re making this (hotly debated!) change for several reasons. Firstly, we believe that it makes the market more efficient, as borrowers will be paying a rate that more accurately reflects lender’s pricing. Secondly, we hope it will slightly reduce the rates that borrowers pay, making Zopa more attractive, to the benefit of both lenders (who will lend their money faster) and borrowers (who will pay less interest). Lastly, we simply believe this is a fairer way of matching lenders and borrowers at a rate that both agree on – and we like to be fair.

Clearly, lenders with offers in the markets may want to reprice their offers in the light of this change (Especially those who are currently offering 1% in order to lend out first in the queue!), and we’ll be contacting all our lenders over the next couple of weeks before making this live to let them know what is happening. We’d also love to hear your opinion on this change – before we do it! Let me know in the comments if you think this is a good, bad or indifferent change – we will listen to what you say!