Average P2P rates pass 10pc in mainland Europe

The average mainland European peer-to-peer lending platform is offering annual returns of more than 10 per cent, Peer2Peer Finance News can exclusively reveal.

According to a new internal analysis of crowdlending platforms across continental Europe, the average target returns being advertised as of May 2023 were 10.07 per cent. This is slightly higher than the most recent analysis of the target returns being offered by UK-based P2P lending platforms.

Earlier this year, exclusive research by Peer2Peer Finance News found that a fully diversified Innovative Finance ISA (IFISA) portfolio spread across all 41 available providers would return an average of 8.83 per cent.

While there is no IFISA equivalent for European P2P investing, investors in some jurisdictions do benefit from their own tax breaks and investment protections. However, for comparison’s sake, our headline figure takes into account only the raw data which has been drawn from publicly available data from 113 active P2P lending platforms from across Europe which are currently open to retail investors. Where a range of different returns was being advertised, a mean value was calculated.

Read more: How to invest in European P2P loans with just €1

Consumer loans appear to be the most profitable for investors at present, with European consumer lenders advertising average returns of 10.8 per cent to their users. Meanwhile, platforms which specialise in business loans are currently advertising target rates of 9.18 per cent on average.

Real estate is by far the most popular lending segment in the European P2P market, and offers average returns of 10.4 per cent. Almost a third (31 per cent) of the platforms analysed specialise in real estate debt or other forms of property lending.

Read more: European P2P sector forecast to become more competitive

The remaining platforms on our list work with a network of international loan originators to generate average returns of between seven and 15 per cent.

Of course, all P2P investments come with the risk of capital loss due to borrower defaults. In some cases, default rates for European platforms are as high as 15 per cent. This risk should always be factored into any new investment decision.