PEER-TO-PEER lending has experienced stellar growth in the second half of 2016, but central bank rate hikes next year could dampen investor demand, new research has said.
Nine major UK P2P platforms lent over £278m in October, breaking the record for the largest amount lent in a single month, according to the latest figures from online aggregator OFF3R.
This equates to a 14 per cent month-on-month increase and puts total lending well over the £2.3bn originated last year.
The OFF3R Index launched last month and uses data gathered from nine P2P platforms: Zopa, Landbay, RateSetter, ArchOver, Marketinvoice, Lending Works, Funding Circle and Thin Cats, as well as new addition Assetz Capital.
“This is a major shot in the arm for the industry, particular in a month when the SME bank referral scheme has also begun to take effect,” said OFF3R. “The outlook is now very positive for the sector particularly as we are likely to start seeing more platforms issuing Innovative Finance ISA products in time for the end of the tax year.”
However, the research also warned that possible interest rate hikes in 2017, to counter rising inflation, could cool off P2P investor growth if returns on traditional savings products improve.
“The P2P sector continues to be very hot and we are starting to see platforms like Zopa addressing this by temporarily putting on hold the onboarding of new investors,” said James Mackonochie, OFF3R’s chief operating officer and co-founder.
“Things could evolve in the sector as we head in to the new year with potential interest rate increases on the horizon… Watch this space.”
Meanwhile equity crowdfunding had been quite badly impacted by post-Brexit uncertainties and had tough comparatives compared to 2015. But it bounced back in October, when fundraising hit £25m, up from £18m in September.