RATESETTER has seen a surge of new investment since interest rates were cut one month ago, fueling hopes that more investors will turn to peer-to-peer lenders as the 0.25 per cent base rate is held for a second month.
The platform told Peer-to-Peer Finance News that it has seen twice as many new investor accounts being opened each day since the interest rate cut compared to the period preceding it.
Following yesterday’s announcement that the Bank of England will hold interest rates at a record low of 0.25 per cent, the lender predicted that more people will consider P2P platforms as an alternative to low-yield savings accounts.
“The Bank of England’s interest rate cut has further reduced returns on savings accounts which were already paying very close to zero,” said Rhydian Lewis, CEO of Ratesetter. “Given this, it’s not surprising that P2P lending is receiving more interest as investors look for better returns in exchange for taking on some risk.
“We’ve had one hundred thousand new visits to our website in the last month alone.”
The base rate was lowered from 0.5 per cent to 0.25 per cent following the UK’s vote to leave the EU. The Bank of England’s Monetary Policy Committee (MPC) said that its economic outlook remained unchanged, and hinted that rates could be cut again in the near future.
“The committee’s view of the contours of the economic outlook following the EU referendum had not changed,” said the minutes from the MPC meeting. “News on the near-term momentum of the UK economy had, however, been slightly to the upside relative to the August inflation report projections.
“The committee will assess that news, along with other forthcoming indicators, during its November forecast round. If, in light of that full updated assessment, the outlook at that time is judged to be broadly consistent with the August inflation report projections, a majority of members expect to support a further cut in bank rate to its effective lower bound at one of the MPC’s forthcoming meetings during the course of the year.”
The next meeting of the MPC will take place on 3 November.