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Predictions for 2014

  1. Peer-to-peer lending will arrange £1billion in new loans
  2. Several existing providers will exit the market
  3. There will be a change in ownership of at least one provider
  4. More providers will enter the market, with the possibility that one will be a well known brand
  5. Interest rates will continue to fall

Other predictions

Tick1. Peer-to-peer lending will arrange £1billion in new loans

In 2013 we predicted £¼billion of new loans, while £½billion of loans were actually arranged.  The growth rate within the sector is now in excess of 100% per annum, so it is highly likely that the £1billion barrier will be broken in 2014.

By year end over £1.6billion of new peer-to-peer loans were arranged.

Tick2. Several existing providers will exit the market

With FCA regulation coming into force in April, this is likely to kill off some existing peer-to-peer companies that are struggling or cannot see a future.  There are several companies that are struggling and one has already closed in January.

Five existing companies exited or suspended their peer-to-peer offerings, most likely due to the introduction of regulation of the sector by the FCA.  The most well known brand to exit for the market was YES-secure (Encash) which bought out all existing lenders.

Tick3. There will be a change in ownership of at least one provider

With peer-to-peer lending becoming ever more popular, it is likely that some companies may become takeover targets.  The increasing competition within the sector may also cause some companies to merge.

The student lender Gradurates had its loan book purchased by RateSetter.

Tick4. More providers will enter the market, with the possibility that one will be a well known brand

In 2013 there were no less than fourteen new entrants into the sector, and several new launches for 2014 are planned.  It is possible that a challenger bank may move into this sector.

Wonga entered the peer-to-peer market in 2014 with its offering called Invest and Borrow.

Tick5. Interest rates will continue to fall

With the increasing popularity of peer-to-peer lending it is likely that lenders will continue to increase at a rate more than the increase in borrowers, which will cause lending rates to fall further.

Rates with all of the main peer-to-peer companies have fallen, but some of the new entrants into the sector have launched with higher rates.