We shaped our current lender products based on market research that showed investors preferred to select products based on how long they wanted to invest their money for. This is why we currently offer products based on short and long-term loans.
However, extensive research of our existing and prospective lenders now indicates that investment term is not the primary motivator. Lenders want more flexibility on when and how they access their money, and many want to take on more risk for a higher expected return.
Our current products, where loan term is the primary decision, do not enable us to offer choice based on access or risk markets. Also, due to the nature of loans, where customers can pay back early for no extra fee, the time it takes for money to be returned to lenders in the short and long markets does not vary greatly. Each pound that you lend in a five year loan is with a borrower for an average of 2 years compared to 1.3 years in a three year loan.
In response, we will shortly be launching a new generation of Zopa lending products that will allow lenders to have more control depending on their appetite for access and risk. We look forward to sharing these with you soon.