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P2P lending no threat to mortgages

Peer-to-peer (P2P) lending will redefine the personal and short-term lending markets, but it will have “virtually no impact” on the mortgage space, according to an industry leader.

Troy McErvale, founder and managing director of Freedom Home Loans and My Personal Lender, believes P2P lending will transform the personal and short-term lending markets in a similar fashion to how securitisation “changed the mortgage lending space forever” in the 1990s.

“I believe we will see not only an increased number of lenders in the small business lending space, but also the continued emergence and adoption of white-labelled platforms as a service option for aspiring P2P funders who do not have the resources to build or manage their own platforms,” Mr McErvale said.

“ClearMatch seems to be a leader in this space and is positioned to capitalise on this opportunity.”

However, Mr McErvale said P2P lending will have “virtually no impact” on mortgage lending.

“Mortgage lending requires money being borrowed long term, yet P2P funding is traditionally lent for the short term,” he noted.

Instead of directly competing against P2P lending platforms, Mr McErvale said banks will become the platforms’ largest institutional investors, or may even look to acquire them “as they have done with nearly all of Australia’s mortgage securitisers”.

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The transformation of the P2P lending market is set to be explored at the inaugural AltFi Australasian Summit 2016, which kick off on Monday, 29 January at Jones Bay Wharf in Sydney.

The conference is designed to provide attendees with insights into the transformation of the non-bank lending sector in Australasia and abroad. It will also analyse the alternative finance products on offer in the market.

The panel of speakers include ASIC chairman Jon Price, RateSetter Australia CEO Daniel Foggo, Spotcap co-founder and CEO Toby Triebel, SocietyOne chief marketing officer Mitchel Harad, and OnDeck CEO Noah Breslow.

[Related: Will P2P lending threaten mortgages]

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