My Lendy Experience – Review of the Portfolio
It started late 2014, the UK p2p lending platform Lendy was then called Saving Stream, but this year it was rebranded. Lendy is a property-secured bridge loan program. Lendy has since 2016 made the following big changes:
- Different interest rates
Originally all loans had a 12 percent interest. Now Lendy assigns specific loan interest rates. Investor interest rate on new loans currently ranges from 7% to 12%.
- Lendy sold the security for the second defaulted loan (Garden Center). Although all borrowers earned principal and interest on this loan, the security's selling price was below the loan amount. Lendy covered the deficit (provision fund) itself.
- As of March 2017 investors can not purchase secondary market loans and deposit funds after (this is still possible on the main market). This has somewhat reduced secondary market liquidity, but generally it is still pretty liquid for those loans that have a mid-to-long remaining term.
- A new default framework exists since April 2017. For loans unpaid, the interest continues to accrue for 90 days, but will not be paid until Lendy collects payment from the borrower. All loans over 180 days overdue are now fully listed as default loans. The number of default loans at this writing rose to 14.
Particularly the last point has sparked debates on chances of recovery, and investors are worried about optimistic valuations. Occasionally, the secondary market swings between mostly empty (except default loans) and plenty.
I continued to increase my portfolio, reinvesting returns and making new deposits through Transferwise and Currencyfair. This was before Brexit's announcement. I'm actually reinvesting now. My portfolio is GBP10k spread over 14 separate loans. The vast majority are interest-rate loans of 12%. I've made three exceptions in the past, but typically only with small amounts, and I tend to sell these lower interest loans first when rebalancing the portfolio. So far, I have had no overdue or default loans – but there are many on the platform (see above). My loans have long remaining terms, the shortest being 147 days.
My yield (self-calculated with XIRR) is 12.1 percent in GBP. Unfortunately, during the time when the pound was high, I deposited most funds, so in Euro currency the yield is only 4.4 percent for me.
Lendy is also one of my favorite lending markets due to interest rates, real estate as an insurance and liquidity. I see the risks in the valuations, but I think that at least the security will cover part of the loan value, and will most likely avoid complete loss in the default loan. I might be more picky in choosing loans, but for me, Lendy is a site that needs less control and monitoring than most other marketplaces I use.
Lendy main features and highlights
- Lending Platform
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