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Marketplace lending expected to top £6bn this year, says report
However, report warns sector will face a significant test of its risk management procedures, loan servicing and recovery practices should economy worsen.
Marketplace lending is expected to top £6bn this year but lenders will face a significant test of their risk management procedures, loan servicing and recovery practices should the economy worsen, a new report warns.
The Marketplace Lending Index report compiled by loan data specialist Brismo in conjunction with Link Group offers an overview of the peer-to-peer and marketplace lending market.
The report says that gross marketplace lending is likely to grow 16 percent from £5.3bn to £6.2bn from 2018 to 2019.
It said the first half of 2019 saw £3bn in new gross lending, the highest six-month total on record, an uplift of 22 percent compared to the first half of 2018.
Property lenders were the key drivers of growth, accounting for three-fifths of additional lending. But the report pointed out that loss rates were weighing net returns.
The peer-to-peer and marketplace lending sector has endured a recent rocky period.
In May, peer-to-peer platform Lendy fell into administration, leaving 20,000 customers in limbo, some of whom had invested six-figure sums.
In July this year, Funding Circle halved its growth forecast for the year after suffering a sharp drop in demand for loans, dealing another blow to the peer-to-peer sector.
The sector has also had to deal with new rules which limit marketing and require lenders to have stronger governance.
The report pointed to a slower growth in net lending, which it said indicates the sector is maturing.
It said its analysis of the net lending of three marketplace lenders-Ratesetter, Zoppa and Funding Circle- totalled £191m in the second quarter of 2019, which was down from £252m in the first quarter of the year.