Interest soars in net 'bank' (From Andover Advertiser)

Interest soars in net 'bank'

4:40pm Sunday 1st November 2009

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Nearly 2,300 people in the Andover area have signed up to a social website to lend and borrow money to each other, bypassing the banks.

Zopa.com, the world's first peer-to-peer Internet lending site, reported recently that 2,263 people in Andover have become members.

Lenders decide the rate they would like to earn and Zopa matches them with credit-worthy borrowers.

Lenders are currently enjoying an average return of 8.1 per cent after fees, while borrowers told the site that the rates are anything from 30-50 per cent cheaper than what they have been offered by the banks.

Zopa, which stands for Zone of Possible Agreement, takes a one per cent fee from lenders and charges borrowers a flat fee of £118.50.

Chief executive Giles Andrews said: "People in Andover who are Zopa members are part of a toal of more than 300,000 across the country who are taking control of their own finances.

"They are realising that even if they can convince their bank to lend them money it will only do so at an extremely high rate, and that a bank will keep a lot of their money in charges.

"Similarly, banks are treating savers with contempt, offering paltry returns on their investments.

"Zopa is a realistic alternative. Zopa lenders have collectively lent more than £50m to credit-worthy borrowers since 2005."

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