RateSetter returns fall as market demand rises

RETURNS on RateSetter’s shorter-term accounts have fallen slightly due to changes in market demand.

The platform’s rolling market product was at 3.3 per cent last week and is now offering three per cent, its one year fix is now 2.9 per cent, down from three per cent, while its five year fix has actually increased slightly from 4.8 per cent to 4.9 per cent.

The rates are set by market demand on the RateSetter platform, but as of the end of March 2016 they were at 3.4 per cent for one month, 3.7 per cent for one year, 4.8 per cent for three years and 6.1 per cent for five years.

A spokesman for RateSetter told Peer-to-Peer Finance News that rates are constantly changing and are set directly due to supply and demand on the platform, so it has no control over them.

Despite the changes, the rates are still higher than savings and cash ISA products. Atom Bank currently offers a one-year savings bond at two per cent, which is still slightly below RateSetter’s rolling market and one-year product.

Savers would have to lock their savings away for five years if they wanted the top paying cash ISA at 1.75 per cent from Paragon Bank.

Read more: RateSetter borrowers have paid back £1bn

It comes as ISA season begins and the big three P2P platforms, RateSetter, Zopa and Funding Circle, look unlikely to have full authorisation in time to offer an Innovative Finance ISA this tax year.

Most platforms have said that once they receive full Financial Conduct Authority authorisation it can take around two weeks to gain ISA manager status from HMRC, which may cut it fine for those without the full permissions.

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