Funding Circle, RateSetter and Zopa have cut their projected returns by as much as 1.2 per cent over the course of the past year, although they are still comfortably beating the current rate of inflation and bank savings rates.
Last year, Funding Circle was projecting target returns of between 4.9 per cent and 5.2 per cent on its conservative product and between 5.5 per cent and 6.5 per cent on its balanced account.
According to the most recent data available from the platform, the conservative account is now estimating returns of between 4.3 per cent and 4.7 per cent, while the balanced account now projects an annualised return of between 4.5 per cent and 6.5 per cent.
On the lower end of the returns range, this represents a drop of 0.6 per cent for conservative account holders, and one per cent for those investors with a balanced account.
In 2019, RateSetter’s actual annual return to investors was 4.4 per cent, versus a 3.7 per cent average return between January and July 2020 – a drop of 0.7 per cent.
However, since 4 May 2020, half of all lender returns have been diverted to RateSetter’s provision fund. Therefore, an investor earning 3.7 per cent in interest between January and May would see their actual returns halved to 1.85 per cent.
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By August 2020, Zopa had revised its projected returns to between 3.4 per cent and five per cent for Zopa Core – versus 4.5 per cent in 2019 – and between four and six per cent for Zopa Plus – compared with 5.2 per cent last year.
Again, taking the lower figures as a guide, this represents a drop of 0.9 per cent for Zopa Core lenders, and 1.2 per cent for Zopa Plus.