P2P lenders dismiss default concerns
Default rates will remain stable throughout 2024, despite concerns about the economy, peer-to-peer lending platforms have predicted.
The UK slipped into a recession during the fourth quarter of 2023, sparking concerns that borrowers may be unable to keep up with their payments.
However, a number of P2P leaders have said that default rates should remain relatively stable this year.
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“This economic environment is not new,” said Paul Sonabend, executive chairman of property lender Relendex.
“We have been exercising extreme caution in making loans ever since 2020. As such we anticipated the issues and have considerable headroom to cover delays in construction and sales.
“As house prices have grown over the period our developers have been selling at or above original valuations. We anticipate a small increase in crystallised losses this year. However, ironically these relate to loans made prior to 2020. Overall our loss ratio will have declined as a percentage of our loan book.”
Narinder Khattoare, chief executive of Kuflink, said that the key for lenders is to build strong relationships with their borrowers to get an early understanding of any challenges they are experiencing when moving towards their repayment.
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“We encourage our borrowers to start working on their exit no later than three months before their exit date and we have a network of broker contacts we can share with them if they need assistance with this,” he added.
“Finally, we are clear from the outset that we have a policy of not extending our loans, so our borrowers need to work on their exit with this clearly in mind.”
Rishi Zaveri, chief executive of Lendwise, noted that P2P platforms are well placed to weather the economic storm.
“The expected election does bring an element of the unknown, but defaults should remain stable as long as action to address these is taken promptly,” he added.
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