2023 will show resilience of P2P investing
2023 will be the 19th consecutive year to demonstrate the resilience of peer-to-peer lending to a growing number of investors, an industry analyst has said.
Neil Faulkner of P2P ratings and research firm 4thWay said there are some signs that the economic downturn has started to deter people from investing in P2P loans but said the industry now has an opportunity to show investors just how resilient this form of investing is.
Read more: P2P well placed for a recession
“Platforms that manage that message successfully will continue to grow, while others are at risk of stagnating for a while,” he said.
Faulkner also noted that rising inflation could push investors to seek double-digit returns.
“While that means going further up the risk scale than they ordinarily would, they should also find that the risks at many of these platforms are not in line with the substantial rewards available today,” he said.
Read more: 4th Way names top six P2P platforms of 2022
“Global banks are required to conduct stress tests to see how their loans might perform in a recession or property crash. 4thWay does the same for many P2P lending and other online direct lending providers, although our tests assume a much more severe downturn and crash.
“Our tests show that, regardless of the economy next year, 2023 is going to be the 19th consecutive year to demonstrate the resilience of P2P lending to a growing number of investors.”
Recent official data showed that the consumer price index rose by 11.1 per cent in the 12 months to October 2022, a 41-year high.