What is the impact of COVID-19 on peer-to-peer lending?

Peer-to-peer loan research firm 4th way came out with a brief note on the impact of the coronavirus pandemic (COVID-19) on the P2P industry. According to 4thWay, a minority of investors are selling their loans because of the risk associated with the outbreak. The report notes that unlike the recent stock market crash, investors who sell their loans have not done so at extremely discounted prices.

4thWay declares that RateSetter, a platform primarily in personal loans, was one of the platforms affected. RateSetter provided the following comment:

“The performance of RateSetter’s portfolio is stable, as our published statistics show, and our expert credit risk and borrower services teams actively monitor and make adjustments every day. In the current climate, we will support our borrowers. Our contingency fund is managed with a buffer to cushion external events and we always focus on investor protection. “

Property of the crowd, a P2P real estate development platform, says it is approving new loans as usual.

Michael bristow, CEO of CrowdProperty, commented:

“It seems likely that the pandemic will weigh on economic activity, at least in the short term, and this has had an impact on global stock markets. Real estate, however, is neither the root cause nor the center of this problem as it was in 2008. Our project pipeline remains strong and we will continue to monitor all projects very closely with our expert eyes. In times of volatile stock markets, robust and well-secured debt products are attractive to an even wider range of investors. “

Neil faulkner from 4thWay, had this to say:

“This is the time when the P2P lending industry will prove that direct money lending is a very solid investment, offering stable results relative to the stock market, shared more evenly among participants. Banks continued to make decent profits on their basic personal, business and real estate loans, even during the height of the economic recession of 2007-2009. The only P2P lending platform that existed at that time easily followed their pace. . We’ve never seen anything like this before, but, as global markets collapse, the vast majority of peer-to-peer investors will continue to profit from the crisis, thanks to reasonable underwriting standards, solid security. , provisioning funds set aside to cover bad debts and attractive interest rates.

4thWay recommended that P2P investors continue to diversify across different platforms and “hundreds or thousands of loans” to help mitigate risk.

In addition, the company said that it is best to lend on a variety of loan types, including small business loans, personal loans, development home loans, and loans against leased properties.

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