Revealed: The top rates for P2P lenders and borrowers
PEER-TO-PEER lenders are now offering rates of almost six times the rate of inflation, research shows.
Investors can access targeted returns from three per cent to 12 per cent across the more established peer-to-peer platforms and those offering Innovative Finance ISAs (IFISAs).
In comparison, the current rate of inflation is 1.8 per cent and the closest a saver could get to that with a traditional account is a five-year fixed rate cash ISA from Paragon Bank at 1.75 per cent.
There are other factors in choosing a platform other than interest rates, such as the type of loans, risk and default rates, but it is an interesting starting point for investors shopping around.
Of the members of the Peer-to-Peer Finance Association (P2PFA), business P2P lender ThinCats offers the highest target return at seven to 8.5 per cent, slightly above Funding Circle’s target of 6.9 per cent.
P2PFA newcomer Folk2Folk offers 6.5 per cent or 5.5 per cent to investors funding secured business loans, depending on the loan to value of the property.
Investors in consumer loans platform Zopa can expect six per cent returns on the Plus account, 2.9 per cent on its Access account and 3.7 per cent on the Classic account.
Fellow P2PFA member and personal loans platform Lending Works offers 3.8 per cent for three years or 4.5 per cent for five years, which can also be held in an IFISA.
Meanwhile RateSetter investors can access 3.3 per cent on a Rolling Market product, three per cent for one year and 4.8 per cent for five years. The platform originates both consumer and business loans.
Investors on the property P2P platform LendInvest can earn average returns from four per cent returns, while Landbay offers 3.75 per cent for those funding its buy-to-let loans. The Landbay product can also be held in an IFISA.
Both are also members of the P2PFA, but some of the highest returns actually come from outside the trade body and can be earned tax-free using an IFISA.
Read more: Lending Works re-opens IFISA to investors
Read more: Landbay unveils its IFISA
Buy-to-let and bridging lender LandlordInvest, which launched its property-backed wrapper in January, offers returns of up to 12 per cent.
Business loans P2P platforms LendingCrowd offers a target rate of six per cent while Crowd2Fund offers 8.7 per cent.
Another IFISA provider, Crowdstacker, currently lists two business loan projects, offering seven per cent for investors in bar owner Burning Night and 5.43 per cent for those funding finance provider Amicus.
Outside of an IFISA, Assetz Capital says its investors are earning gross rates of return of between 3.75 per cent and 15 per cent by funding business loans. Commercial property P2P lender Proplend, which is still developing its IFISA, offers investor returns of five to 12 per cent.
While investor rates may vary, deals on offer to borrowers are more aligned.
The rate a business or individual gets will depend on the amount borrowed and their own credit score and risk assessment, but Zopa offers personal loans as low as 3.2 per cent, compared with 3.9 per cent with RateSetter and six per cent on LendingWorks.
In the business space, firms can access rates from 5.5 or 6.5 per cent with Folk2Folk or 5.95 per cent with LendingCrowd.
Property developers and buy-to-let landlords also have a fair bit of choice when it comes to P2P finance.
LandlordInvest offers 0.6 per cent per month on bridging loans, compared with 0.64 per cent to LendInvest borrowers.
Buy-to-let landlords can apply for loans from LandlordInvest at 5.5 per cent or from 4.2 per cent with Landbay for a fixed rate mortgage or 3.88 per cent on a tracker deal.