Predictions for 2014
- Peer-to-peer lending will arrange £1billion
in new loans
- Several existing providers will exit the market
- There will be a change in ownership of at least
- More providers will enter the market, with the
possibility that one will be a well known brand
- Interest rates will continue to fall
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.
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.
There will be a change in ownership of at least one
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.
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.
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.