P2P lending dip blamed on economic uncertainty and authorisation process

P2P lending dip blamed on economic uncertainty and authorisation process

A £57m drop in new peer-to-peer lending between Q1 and Q2 2016 has been blamed on relentless economic uncertainty and the battle to gain full regulatory authorisation, according to lenders.

The Peer to Peer Finance Association (P2PFA) revealed that new lending fell to £658m in Q2 compared to £715m.

New lending to businesses fell to £406m from £445m, while new lending to individuals dropped to £252m from £270m.

Net lending flow, meanwhile, took a significant hit with the overall figure falling to £174m compared to £304m in the previous quarter.

Kevin Caley, founder and chairman of ThinCats, felt that £658m in new lending was still a huge achievement given the economic uncertainty it is seeing, despite lenders telling Bridging & Commercial last month that Brexit would not affect peer-to-peer funds.

“In terms of the broader industry, we have noticed a slowdown in the last quarter as a direct result of current uncertainty and this has had an inevitable impact on enquiries. 

“However, we do not see this continuing as a long-term trend. As rates are set to be cut even further, savers will continue to bear the brunt of meagre returns on their money and I’m confident that peer-to-peer will continue to bridge the UK’s business funding gap and deliver strong results.”

Rhydian Lewis, CEO and co-founder at RateSetter, put the dip down to the authorisation process adding: “In recent months there’s been a levelling off in general borrower demand as people defer large purchases, perhaps reflecting economic uncertainty. 

“A more longstanding thing in our sector specifically is that platforms’ focus has been on sustainability rather than growth, with for example the involved process of gaining full regulatory authorisation.”

However, Christine Farnish, chair of the P2PFA, highlighted the positive news which came out of its report.

“The main story behind these latest figures on peer-to-peer lending is the continued expansion in the number of investors and borrowers – with more than 150,376 lenders and 332,107 borrowers currently using P2PFA platforms. 

“More borrowers – both individual and businesses – underscores that peer-to-peer lending is now a mainstream alternative finance product, engaging an increasing number of participants.”

The P2PFA reported that cumulative lending was now edging towards the £6bn mark as it grew to £5.8bn in Q2 compared to £5.1bn earlier this year.

Landbay recorded a £5m increase in lending compared to Q1 and John Goodall, CEO and co-founder of Landbay, felt the P2PFA’s figures showed that peer-to-peer lending was still becoming an increasingly attractive option to investors and borrowers.

“We at Landbay have seen a rise in the number of both individuals and companies entering the market.

“With savings returns still poor from high street banks and stock markets suffering from significant volatility, peer-to-peer represents an innovative investment opportunity for those seeking a better return.”


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