Fewer consumer borrowers are requesting breathing space on their loans, RateSetter has revealed.
The peer-to-peer lender said its loan performance was in line with expectations during April and it has avoided a “dramatic rise” in arrears.
“We have begun to see a slowing in the rate of consumer borrower breathing space requests and the key determinant of the future expected credit losses will be how many of these borrowers are able to return to paying normally and how many unfortunately will not,” RateSetter said in a note to investors.
“We have not seen a dramatic rise in actual arrears and so it really is a case of seeing how many of the breathing space borrowers return to normal.”
The P2P platform also said that a £4.65m debt sale during April increased the cash balance in its provision fund, but also increased future expected credit losses by the value of expected recoveries that have been forgone.
This meant the interest coverage ratio in the provision fund dropped to 74 per cent but the amount of capital diverted into the fund increased slightly, taking the capital coverage ratio from 166 per cent to 169 per cent.
It comes after RateSetter announced a temporary reduction in interest rates during May in response to the economic uncertainty caused by the coronavirus pandemic.
The platform has also been hit by increased withdrawal requests, which has left investors waiting longer to access their funds.