Just as RateSetter started in the UK, the platform’s borrowers consist of individuals and the target borrower is at the ‘premium’ end of the credit spectrum. Borrower rates are between 9 and 14% which compare favourably to the rates offered by banks - 15%+. Lenders can currently earn around 10% after fees in the 5year product and around 6% in the one month product. This compares favourably to savings rates of around 3%. As in the UK, the platform has a provision fund. This fund was seeded with A$200k of RateSetter’s money and now stands at A$225k, more than sufficient to cover the A$560k currently on loan.
The platform’s credit processes are described as being more manual that those of its UK parent, mostly down to the poorer quality of credit data available from third party agencies. This has led to a very cautious approach initially. The team have now made just over A$720k of loans, however they have fielded $32m of applications!
Looking forward to 2015, the platform is cautious about growth expectations, understandably wanting to nurture controlled and sustainable growth rather than going all out. They see their second and third years as the years which will see the most growth. The key challenge to overcome is to increase public awareness of the industry’s existence (with both investors and borrowers).
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