FOLK2FOLK, the local lending company, has delivered more than £11.3m in gross interest payments to investors during financial year 2019. The company has seen a year on year increase in the amount of interest earnt by investors via its platform, with 2019 delivering its biggest pay-out to date.
Of the £11.3m, around 8% was via FOLK2FOLK’s Innovative Finance ISA (IFISA). The typical fixed interest rate investors earn via the platform is 6.5% p.a.
FOLK2FOLK fund property secured loans using funds from its community of approved lenders. Traditionally FOLK2FOLK was powered by only retail investors but last year opened up its investment platform to formally welcome institutional investors. Since then, the platform has secured several institutional investors, including local authorities, and is actively engaging with, and seeking, more.
In an environment of low interest rates, fluctuating share prices and absent dividends, a property secured loan investment offering a fixed interest rate of 6.5% p.a. remains an attractive option to FOLK2FOLK investors.
A sum of £50,000 in a high street bank saving account may earn up to £500 (based on a bank interest rate of 1% p.a.) gross in interest over the year; if invested via FOLK2FOLK, the same sum would typically earn £3,250. For larger sums, the difference is greater. On £250,000 investors would typically earn £16,250 gross in interest via FOLK2FOLK, and up to £2,500 (based on a bank interest rate of 1% p.a.) via a high street bank savings account. FOLK2FOLK investments are secured against land or property with a maximum LTV of 60%.
Usually, around 90% of FOLK2FOLK’s investors reinvest once their loan investment redeems, supplying the finance needed to help credit-worthy British businesses wanting to grow, develop or diversify.
Roy Warren, FOLK2FOLK Managing Director, said: “We’re pleased to see investor confidence remaining strong. We have an extremely high reinvestment rate and while we have some investors, whose investments have recently redeemed, who have chosen to temporarily ‘sit out’ during the pandemic, others are adding further funds on our platform.
“Since the beginning of March, we have facilitated £12.3m of lending funded by both new investors and existing. We believe it is crucial for our country’s recovery to keep the economy moving, by facilitating loans and income generating investments, and we’re heartened that our investors appear to share that view.”
FOLK2FOLK has kept its secondary market open during the pandemic to ensure the opportunity for liquidity remains for its investors, and default rates remain low with no investors having lost any capital.