ALMOST £150,000 of loans with a buyback guarantee have been purchased through Rebuildingsociety’s secondary market in the first three months since the function was launched.
The buyback guarantee lets investors purchase a loan on the peer-to-peer business lender’s secondary market and have it repurchased by the original seller within 30 days if its falls more than 60 days behind on repayments.
Buyers pay a higher premium to cover the extra security.
The platform has revealed that 16 loans with guarantors have been sold so far, with an average guarantee of £9,302.94.
Investors are earning on average 12.39 per cent from these loans, Rebuildingsociety said.
The platform argues that its buyback guarantee is more beneficial than provision funds offered by its rivals.
Stephen Wallis, non-executive risk director for Rebuildingsociety, said it is more flexible as investors can’t opt out of a provision fund or choose when to use it.
Additionally, the platform argues that provision funds cost money to maintain and work at the discretion of a platform so there is no guarantee it will be used
“The success of any risk mitigation structure comes down to the design and implementation,” Wallis said.
“We’re confident that the P2P lending buyback guarantee gives a clear correlation of risk and return, whilst respecting that individuals have varying appetites to risk.”