P2P returns predicted to go down as market grows

Peer-to-peer investment returns are predicted to go down as the market grows, new research suggests.

Analysis from European P2P platform Robo.cash found that the average rate of return is decreasing by 0.03 percentage points every month, while the market grows at an average monthly rate of 2.8 per cent, or €3.6m.

“There are some deviations in the trend caused by various global events,”the firm said. “However, in general, the identified dynamics continue.”

Read more: Why are P2P platforms raising their rates?

The platform’s analysts name a few possible reasons for the decline, such as excessive demand and business scaling. “If the platform has already found the main niche for itself, then it makes no sense for it to keep the rates very high,” Rob.cash said.

Platforms may also have to resort to financial leverage, such as issuing bonds or taking a bank loan, which may lead to a change in rates in such situations.

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“In certain economic circumstances, it may turn out to be very high, and, in order to maintain its profits, the platform will be forced to reduce rates in the short term,” Rob.cash said.

The analysts predict further growth in volumes with a decrease in the rates in the long-term.

Read more: CrowdProperty raises investor rates