WHAT a difference a year makes.
Official inflation and savings figures show just how tough it has been to get any decent returns on cash and the role peer-to-peer investments can play.
Consumer price inflation when we started in September 2016 was at one per cent. Since then, it has almost tripled to 2.9 per cent today.
The household savings rate – the percentage of disposable income being saved – was at 5.3 per cent at the end of September 2016, but hit record lows of 1.7 per cent in the first quarter of 2017, the lowest level since records began in the first quarter of 1963.
Savings rates have actually increased slightly. The best buy easy access rate this time last year was one per cent from RCI Bank. The same provider now offers 1.2 per cent.
Read more: Four in 10 Brits shunning savings
The best rate on a cash ISA last year was 1.95 per cent but you had to lock up your money in a five-year fix. Virgin Money now offers a rate of 2.15 per cent for five years or you could get 2.4 per cent in a standard savings account with Atom Bank.
But P2P platforms offer much higher returns, albeit with the extra risk of backing start-ups or landlords and the lack of Financial Services Compensation Scheme protection (FSCS).
RateSetter’s historical market data shows that in September 2016 its rolling market product had a rate of 2.9 per cent, this is now 3.3 per cent. The platform’s one-year fix has grown from 3.3 per cent to 3.8 per cent while its five-year term offer has increased from 5.3 per cent to 5.7 per cent.
Other P2P firms such as Zopa have cut rates, now offering 3.7 per cent and 4.5 per cent, while Funding Circle says you can earn from 4.5 per cent.
There are other P2P platforms offering into double figures, so P2P is clearly offering a viable alternative as investors struggle for a return.
Read more: A year in the life of Peer2Peer Finance News