Investors can expect “higher quality” P2P lending

According to an industry expert, peer-to-peer investors can expect better quality loans and higher interest rates from platforms in the coming months.

Mike Carter (pictured), head of platform lending at Innovate Finance’s 36H Group, has predicted that the current economic turmoil will force all lenders to tighten their lending criteria. Banks have already started withdrawing some loan offers and raising lending rates in anticipation of further rate hikes.

While P2P lending platforms already have rigorous due diligence processes in place, Carter believes those processes will continue to be refined, which will result in higher-quality loans.

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“All platforms are currently tightening their lending criteria in anticipation of an economic downturn, so the loans that will be made in the coming months will be made to higher quality borrowers than before,” Carter said.

“Market prices for some loans are increasing with base rates across the lending market and this will be reflected in the P2P sector,” he added. “That’s why P2P lenders may also see higher interest rates in some cases.”

Some P2P lending platforms have already started increasing their investor returns. Loanpad has increased its rates monthly for the past six months, and in September Assetz Capital announced it would increase rates on all three of its access accounts.

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