Predictions for 2012

1. New providers will enter the market, with the possibility that one will be a well known brand
2. An existing provider will exit the market
3. Peer-to-peer lending will exceed �180million of outstanding loans
4. Bad debt rates will increase slightly
5. New products will be introduced

1. New providers will enter the market

The last two years have been no less than seven new entrants to the market, so it is a safe bet to predict other new entrants.  However any new entrant will have to persuade lenders that their value proposition is better than their competitors and this is becoming increasingly difficult in a crowded market.

In 2012 there have been no less than six new entrants.  The new entrants include One Stop Funding in February, The Lending Well in April, Squirrl.com in May, Buy2Let Cars in June, and Funding Knight and ReBuildingSociety in September.

2. An existing provider will exit the market

There has already been one casualty and with differing successes in obtaining both attracting and retaining lenders and borrowers, some companies will struggle.

This was realised in March with disappearance of BigCarrots.  In April Danesfield stopped accepting new loans.

3. Peer-to-peer lending will exceed �180million of outstanding loans

The last year saw the breaking of the �100million barrier and with the large year-on-year growth being experienced then we may see �180million in outstanding loans.  This would represent a 70% year-on-year growth if achieved.

This was realised in November when P2P loans reached �183million and by December there were just over �200million in outstanding loans, representing a 90% year on year growth.

4. Bad debt rates will increase slightly

We have already seen some increases in bad debts, so it is also a relatively safe bet that with the current economic climate that these bad debts will continue to rise.  We are not predicting a massive rise, as if this were to materialise this would threaten the entire peer-to-peer lending industry.

There has been an increase in bad debt at RateSetter and Funding Circle, but these are still well below estimates.  We have also seen large increases in bad debt at YES-secure (Encash) and these are significantly above estimates.

5. New products will be introduced

There are fixed rate loans, but this could be extended to variable or tracker.  There could also be personal loans secured on assets, or something completely different.

This was realised in February with the RateSetter 18 and 24 month loans which use an innovative new 1 year fixed rate bond.  In addition in April a new provider called The Lending Well offered payday loans.