Landbay boss John Goodall has said he has “no regrets” about exiting the retail peer-to-peer lending sector.
The buy-to-let mortgage lender shifted purely to institutional lending in December 2019 and a year on has seen its loanbook grow by 50 per cent to approach £650m by the end of 2020.
Goodall (pictured) acknowledged that the lower interest rate environment that has emerged since Landbay closed to retail investors may have made his platform more attractive but told Peer2Peer Finance News that it still would have been challenging to grow the business.
“Our yields are relatively low because of our type of lending,” he said.
“The average rate we are lending out at to borrowers is probably at 3.6 per cent.
“For P2P lending to work we would need a margin on that so it would be hard to offer anything above three per cent.”
Goodall said the pandemic and lockdown would have added another complication, as some P2P lenders have found, due to requests for payment holidays by borrowers and increased withdrawals by investors.
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“That would have been quite hard for retail investors if they were reliant on the interest,” he added. “There would, I suspect, have been a serious liquidity issue.
“It would have been a challenging task to manage customers.”
Goodall said five per cent of its lending was retail-funded before it exited the P2P market but the amount of time and effort was “a lot more than five per cent.”
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