So, with this increased supply of lenders, basic economics says that we should see lending rates trending lower, right? Apparently not. We’ve plotted the 30 day moving average gross interest rate for Funding Circle’s five risk bands on the chart below. Institutional investors and retail investors alike are enjoying record or near record gross interest rates across the five risk bands. All this whilst the Platform is able to boast record volumes. Win win!
30 Day Moving average gross interest rate
A (Low risk)
A+ (Very low risk)
B (Below average risk)
C (Average risk)
Funding Circle appears to be managing its supply and demand expertly. With the current shift in rate pointing to a deeper pool of demand from borrowers than many had anticipated/feared. Perhaps the partnership that the platform forged with Santander earlier this year is beginning to yield dividends? Samir Desai also revealed in his Keynote at this week’s Lendit Europe conference that the platform is continuing to improve its credit modeling techniques. So in theory, net returns should also be increasing.