Some investors are using Proplend’s liquidity in its secondary market to reduce their overall peer-to-peer exposure when they can’t do the same on other platforms.
The P2P property lender revealed that some of its customers have told them that they are “re-evaluating the split of their overall savings and investment portfolios”, while others “have admitted to using Proplend’s liquidity to reduce their overall P2P exposure, when they can’t do likewise on other platforms.”
Proplend’s secondary loan exchange is continuing to offer liquidity to lenders for all ongoing loans where interest payments are continuing as agreed and aren’t within the final month of their term.
“This does not represent a mass exodus by any means, and we’re not taking it personally,” Proplend said in a blog on its website.
“In fact, each lender selling gives another a chance to invest – be it existing ISA lenders using their subscription allowances or replaceable balances by the end of this tax year, or new Proplenders using new 2020-21 allowances or turning to investing where saving is no longer viable.”
The platform said that there are more loans listed than usual on its secondary loan exchange, sales are taking longer and selling a loan part at ‘par’ is naturally going to be more difficult where supply is greater and other assets are suffering depreciation.
Proplend reassured investors that it has an interest reserve – a minimum three months of interest held on each loan.
This ensures that in the event of a borrower failing to make their scheduled interest payment, investors still get paid their interest on time every month.
And using this interest reserve, the platform said it is able to listen to temporary payment requests from borrowers.
Proplend has been reaching out to borrowers in the past few weeks and said it is reasonable to listen to all requests from mortgage borrowers where the revenue from their tenants is used to service their loan.
“Our door is always open to borrowers, and where warranted we believe the interest reserve, in place for every loan, has the potential to double as a tool to help safeguard the long-term health of lenders’ capital investments – as well as their short-term income interests,” Proplend said in the blog.
The platform revealed that most of its borrowers did service their loan interest during March and has been told by many borrowers that they expect to be able to maintain payments “as things stand”.
And despite the current market conditions, Proplend said it is continuing to see a considerable number of new borrowing enquiries.
The platform said that it is reviewing the terms for existing pipeline loans and adapting lending criteria for future facilitation, at least until the economic lending conditions improve.
“In the current climate, we can’t and will not pretend that it’s business as usual and it’s important to acknowledge that these are extraordinary origination and investment circumstances,” Proplend said in the blog.
“It would be naïve to fund a loan today on the same basis as we did even a month or two ago.”