WITH credit conditions getting tougher, one of the ‘big three’ peer-to-peer lending platforms, Funding Circle, recently lowered its annual return projections.
It should be noted that the ‘big three’ platforms have different business models and lending criteria so should not be compared on rates alone, but how do Funding Circle’s returns stack up for any new investor looking at the biggest brands in the market?
Funding Circle recently cut projected returns on its Conservative and Balanced products.
Its Conservative product targets 4.9 to 5.2 per cent, from between five and 5.5 per cent previously.
This product offers exposure to loans made only to creditworthy businesses deemed lower risk.
Balanced, which also lends to higher risk businesses and has a higher estimated bad debt rate, now targets returns of 5.5 – 6.5 per cent, down from the previous six to seven per cent.
In contrast, P2P consumer lender Zopa offers returns of 4.5 per cent in its less risky Core product, while Zopa Plus invests in higher-risk loans for a higher estimated return of 5.2 per cent.
The platform told Peer2Peer Finance News earlier this month that it is “always keeping a close eye on market conditions” and reflects these in its credit policies.
RateSetter, meanwhile, says investors can currently earn returns of 6.1 per cent on its five-year market loans, 4.1 per cent on its one-year market, and 3.4 per cent on its Rolling Market.
In January RateSetter announced plans to add one-year loans to its Rolling Market, where capital is continuously reinvested rather than being repaid after a set term.
Data correct as of 25 February 2019