Update: As of 24th May 2019, Lendy has gone into administration. Read more here:
Lendy (formally known as Saving Stream) offers investment in loans secured against property, with a max LTV (loan-to-value) of 70%. For borrowers (typically property related businesses) they provide bridging loans and development finance via the sister site Lendy Finance from 0.65% per month. They have grown quickly and are now one of the larger P2P platforms, with more than £266million lent out to date.
Expected Returns: N/A
Provision Fund: N/A
Sell Out: N/A
Minimum Investment: N/A
Innovative Finance ISA: N/A
Note: at the end of March 2017 Saving Stream rebranded as ‘Lendy’. This review still calls the platform ‘Saving Stream’, but is relevant to Lendy as nothing much has changed to how the platform actually works.
Note 2: On 24th May 2019, Lendy went into Administration
An example Saving Stream investment was structured like this:
Screenshot: Saving Stream’s Pipeline page. I’ve greened out the asset details to avoid sharing private info.
The old Saving Stream used a pre-funding mechanism to invest in new loans. There was a pipeline page on the site (screenshot above) with potential new loans. The day before a new loan ‘goes live’ you received an email reminding you to update your desired pre-fund amount. They then use this to allocate the loan with a ‘bottom-up’ model. So, if you have a £1 million loan, 5 people pre-bid £100k and 5 people pre-bit £200k, the bottom-up method means everyone gets £100k. An alternative pre-bid method used by other sites is a ‘scale-back’ where everyone would get an amount scaled in the % that they pre-bid.
Saving Stream used an ‘Invest Now, Pay Later’ on pre-bid loans. So, you wait to see how much you are allocated before having to deposit the money.
When I first joined, all loans were at 12% interest but in late 2016 Saving Stream introduced lower rates of return. Saving Stream suggested this was to allow them to take up opportunities in lower risk, lower return loans.
The chart above shows the difference in lender and borrower demand during 2016. This was part of Saving Stream’s motivation to introduce sub-12% loans. The July dip coincides with the Brexit vote at the end of June and which sparked a temporary respite in lender demand. According to Saving Stream, there was the potential to lend out an additional £25 million in September 2016 if they had the flexibility to offer lower rates. At the time the change was introduced, some private investors suggested it may have been to take a larger profit margin from the highest demand loans. Regardless, several months on there is still a stream of 12% loans and you can choose to invest where you like.
Deposits and withdrawals were processed once a day during the week and occasionally at the weekends.
In the early days, one of the great things about Saving Stream is the online lender community. Usually whenever I recieved the email about a loan go-live, I used to check the P2P Independent Forum here aswell as the documentation on the Saving Stream website. The exact loan titles are ****’d out on the P2P forum for privacy reasons. Often other investors will spot something you might not have noticed, and for beginners it’s a great way to learn what other investors look for. Later on the P2P Independent Forum became less useful for this shared analysis.
Saving Stream Secondary Market
There were no fees to sell a loan-part on the secondary market, but you didn’t earn interest while your loan was for sale. Liquidity depended completely on investor confidence and was not something to be taken for granted.
Brexit + Bank Retreat = Opportunity
Saving Stream’s loan book grew massively in 2016, from £73million in Dec ’15 to £165million in Dec ’16. They attribute this in part to Brexit and falling bank lending. They believe that as banks have reduced lending to property developers, particularly after Brexit, this has opened the door for them to “step in and fill the funding gap”. This chart comes from Saving Stream’s December 2016 Annual Report: