Home improvement seems to be the flavour of the month in the alternative finance space, with an increasing number of DIY handy men and women turning to peer-to-peer lenders to finance renovation projects.
This is based on newly released data from consumer lender RateSetter. The ascendant UK peer-to-peer platform has seen a record £3,678,066 in lending for home improvement come through the platform in July. That’s a 46% increase on July 2013, although it’s fair to say that a large part of that jump is due to a general rise in the platform’s profile over the past year.
To offer a few more stats: in 2013 the value of home improvement loans jumped by 189% year-on-year to £26,025,037. In 2014, RateSetter has already made 3,296 home improvement loans worth a grand total of £23,025,037. This boost in home improvement loans may also be attributed to the sharp rise in house prices over recent months – which has led many homeowners to opt for renovation rather than purchasing new property.
But why are consumers heading to platforms like RateSetter in order to finance these projects? Marketa Zvelebil, 54, from London, borrowed £20k for home improvements:
“I chose peer-to-peer lending because I was intrigued by the concept and quite liked the idea of it. So when I needed cash for some home improvements, I decided to try it.”
“I liked the simple and easy process. Most importantly, RateSetter is not a bank and so the interest I am paying goes to a lender.”
Rev. William Ruddle, 38, from Ashtead, took out an £8k loan to renovate a number of rental properties:
“Being in tied accommodation, over the years I have developed a significant source of rental income from a number of properties that I own, and to keep this income coming in I wanted to update the properties and do some renovations. When I approached the banks for a loan to enable me to do this, they wouldn’t consider me. Peer-to-peer lending wasn’t something that I was considering until I came across the idea online, after which I thought it was worth a look.”
News of this kind won’t set the peer-to-peer world ablaze, but it’s always worth keeping up to date with borrower trends and trying to dig a little deeper. After all, in terms of volume the majority of peer-to-peer platforms are primarily constrained by borrower demand – not investible capital. And for that reason it’s absolutely essential to pay heed to the motivations of people like Zvelebil and Ruddle in choosing to venture down the peer-to-peer path.