Lendermarket increases Creditstar returns to 18pc
Lendermarket has increased the returns on the long-term loans offered by its loan originator Creditstar, to as much as 18 per cent.
Previously, Creditstar’s returns ranged from 12 to 15 per cent, but Lendermarket has hiked the rates on those loans with a term time of more than 720 days to encourage more investors to support longer-term lending.
“Currently, the demand is surpassing the supply of investment products on the platform,” said Lendermarket in a blog on the company’s website.
“In order to make our products more sustainable, interest rates for loans on Lendermarket will be adjusted to increase with loan duration.”
Read more: Lendermarket investors earned €5.6m in interest last year
Lendermarket said that there has been a “solid upward trend” in the platform’s interest rates over the past 12 months, but noted that due to macroeconomic uncertainty in the financial markets over the last year, lending companies experienced a supply of funding shortage. As a result, more of these companies opted to raise capital via Lendermarket, and this led them to offer higher than average interest rates, regardless of the loan duration.
“We are confident that the shift from short-term to longer-term loans will bring further stability, not only to our platform but to our investors and our loan originators as well,” Lendermarket added.
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“Despite the fact that shorter term loans are typically less risky than longer term loans, margin levels for both short and long-term loans stayed relatively on par on our platform. This resulted in an unsustainable risk-reward profile of investments.
“By increasing interest rates on longer-term loans, balance will be restored for investment products on the platform.”
In 2022, Creditstar Group was Lendermarket’s most popular loan originator with 325,000 loans published.
Read more: Why are P2P platforms raising their rates?