Assetz Capital has predicted the Covid-19 crisis will lead to a rise in defaults and recoveries on the platform.
The business and property peer-to-peer lending platform said prior to the pandemic its levels of loans in default and recoveries were broadly in line with expectations.
“Whilst there are certain statutory restrictions introduced as a result of Covid-19 that restrict enforcement action for the time being, we certainly expect there to be an increasing number of defaults and recoveries, caused by the subsequent recessionary pressures,” Assetz said in a blog on its website.
“This is a consequence of the economic cycle and like many other lending operations we will not be immune to that.”
The platform said that currently the full future impact of the coronavirus on businesses is still largely unknown because of the various government stimulus packages and borrower forbearance avoiding many short-term defaults.
“We have been proactively dealing with Covid-19 related issues as the pandemic has evolved and will continue to deploy well established recoveries methods to best protect your loan investment,” Asetz told investors in the blog.
“The property security is a critical aspect of that protection and we continue to only carry out new lending with that particular security in place.”
In a separate blog, Stuart Law, chief executive of Assetz Capital, said that negative interest rates are still a possibility in the winter and could benefit the platform’s investors.
He said that when inflation rises again in due course it may be without the usual corresponding increase in interest rates, as inflation could be tolerated for quite a while to help the economy recover.
“If this does happen then we expect that the differential between interest rates and our target investment rates would remain healthy,” Law said in the blog.