Zopa has stopped lending to borrowers in higher risk bands in its latest response to the coronavirus crisis.
The peer-to-peer lender said it had already tightened its lending criteria but has now decided to stop originating loans that would normally have fallen into is C, D and E risk bands.
The move means its Core product will only fund loans in the A* and A bracket while Zopa Plus will also fund loans in the B risk band.
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An email to investors, seen by Peer2Peer Finance News, said its total origination would be down 75 to 80 per cent this month compared with the start of the year but said investor rates would be increased to make up for this.
“With the money available for Zopa to lend, we could originate much more but have taken this step as a precaution to make sure your money and that of our institutional investors is only invested in loans to customers who can afford them even in the face of this economic uncertainty,” an email to Zopa investors said.
“We believe this is the right thing to do for borrowers and investors.”
Zopa said it would reevaluate its decision as it gets more information on the response of borrowers to the pandemic.
The platform has been contacted for further comment.