P2P lending growth signals shift in investor attitude

RateSetter announced this week that it has doubled its lending volumes in six months, hitting a “milestone” of $200 million of loans matched to investors.

The lender attributed its growth to “poor returns on traditional investments” from saving and term deposit bank account as well as the increased attention directed at the banking sector’s conduct.

RateSetter CEO Daniel Foggo believes that both borrowers and lenders are beginning to identify new opportunities in the P2P lending space.

“We have had a great year,” the CEO said. “The peer-to-peer lending industry is reaping the benefits of Australians’ frustrations with the banks, with record numbers of investors and borrowers seeking out the better-value alternative we offer.

“By turning to peer-to-peer lenders and cutting out the costly middleman, borrowers and lenders are getting a much better deal.”

Earlier this year, RateSetter conducted a research which revealed that 56 per cent of investors reallocated funds from savings accounts and 17 per cent from term deposit accounts into the P2P lending platform.

A further 17 per cent transferred funds from domestic equities (shares), 4 per cent from residential or commercial property, 2 per cent form international equities (shares) and 1 per cent from a managed fund.

The research also found that millennials (18–36), who make up 58 per cent of investors, invested the least and got the lowest return on investment, investing an average of $9,454 with a return of 6.85 per cent; post-millennials (37–54) invested an average of $35,201 with a return of 7.17 per cent.

Pre-retirees (55–64) invested $66,118 with an ROI of 7.18 per cent, and an average of $64,427 was invested by retirees (65 and over) with a return of 7.43 per cent.

Self-managed super funds (SMSFs) invested an average of $85,316 with a return of 7.75 per cent.

“Back in June 2015, we were thrilled to celebrate funding $1 million in loans in just one month. In October, we loaned that same amount in one day,” Mr Foggo said.

“This growth exceeded even our own estimates. Peer-to-peer is booming in Australia because we are providing a genuinely attractive alternative to both investors and borrowers.”

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