THE MAIN peer-to-peer lenders are currently offering rates five times higher than the best offerings on the mainstream savings market.
It comes as a new challenger bank launched last week called PCF, offering a fixed savings rate of 2.6 per cent.
This may come with Financial Services Compensation Scheme (FSCS) protection, but seven years is a long time to lock up your money for and savers could do better by taking a bit more risk with a P2P platform.
P2P investors can earn up to 6.1 per cent a year for backing consumer loans, even while using an Innovative Finance ISA (IFISA)
Zopa offers a rate of 3.9 per cent in its core product or 6.1 per cent for those willing to lend in higher risk markets.
Alternatively, LendingWorks currently offers up to five per cent on its insurance-backed products.
Rates in the business P2P lending space tend to be higher.
Secured business lender Folk2Folk is currently offering rates of around 6.5 per cent, while Funding Circle investors can get 7.2 per cent for unsecured loans to small firms.
Investors can get slightly higher with ThinCats, which is offering up to 8.5 per cent on secured loans.
Meanwhile P2P buy-to-let lender Landbay is offering investors 3.75 per cent returns on loans that are secured on property.
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Another option is loans secured on invoices, as offered by MarketInvoice. The invoice finance P2P lender has provided gross yields of around eight per cent in previous years and is on 4.83 per cent so far in 2017.
Meanwhile, RateSetter, which offers consumer, business and property loans, currently has rates at 3.3 per cent on its easy access rolling market account, two per cent for a one-year fixed term and 4.6 per cent for five years.
These are just the rates on offer from members of the Peer2Peer Finance Association (P2PFA), which make up the lion’s share of the P2P market.
There are other options.
For example, secured business lender Assetz Capital offers returns of 3.75 per cent to 18 per cent, while ArchOver offers up to nine per cent. Alternatively Money&Co, founded by City superwoman Nicola Horlick, offers between 8.5 and 10 per cent.
In the property space, investors can get up to 10 per cent with development loan provider Relendex or five to 12 per cent on buy-to-let loans with LandlordInvest.
Platforms will have different levels of risk so it is still worth doing due diligence and checking the types of borrower, underlying assets and default rates, but the data shows the mainstream savings market is still failing to keep up.
|Provider||Type of loan||Projected return|
|Assetz Capital||Business and property||3.75-18 per cent|
|LandlordInvest||Property||5-12 per cent|
|Money&Co||Secured business||Up to 10 per cent|
|Relendex||Property||Up to 10 per cent|
|ArchOver||Secured business||Up to 9 per cent|
|ThinCats||Business||Up to 8.5 per cent|
|MarketInvoice||Invoice finance||8 per cent|
|Funding Circle||Unsecured business||7.2 per cent|
|Folk2Folk||Secured business||6.5 per cent|
|Zopa||Consumer||3.9-6.1 per cent|
|LendingWorks||Consumer||Up to 5 per cent|
|RateSetter||Consumer, business and property||3.3-4.6 per cent|
|Landbay||Property||3.75 per cent|