Investors can expect “higher quality” P2P loans
Peer-to-peer investors can expect to see higher quality loans and higher rates from platforms in the coming months, according to one industry expert.
Mike Carter (pictured), head of platform lending at Innovate Finance’s 36H Group, has predicted that the current economic turmoil will require all lenders to tighten their credit criteria. Banks have already begun withdrawing some loan offers and raising borrower rates in anticipation of new base rate hikes.
While P2P lending platforms already have strict due diligence processes in place, Carter said he believes that these processes will be further refined, resulting in higher quality loans.
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“All platforms will be tightening their credit criteria currently in anticipation of an economic downturn and so loans written in the coming months will be to higher quality borrowers than before,” Carter said.
“Market pricing for some loans is increasing with base rates across the lending market, and this will be seen in the P2P sector too,” he added. “Therefore in some case P2P lenders may see higher rates as well.”
Some P2P lending platforms have already started to increase their investor returns. Loanpad has been increasing its rates monthly for the past six months, and in September Assetz Capital announced that it would be increasing rates across all three of its access accounts.
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