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Property deals drive record Marketplace lending in H1

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  • 19/11/2019
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Property deals drive record Marketplace lending in H1
Marketplace gross lending hit £3bn in H1, the largest amount for any six-month period and higher by 21.6 per cent compared to the same months in 2018, the Marketplace Lending Index has revealed.

 

Growth was driven by property lending, which rose 54.5 per cent to £848m during the first half.

Business lending reached £1.1bn and consumer lending hit £1bn.

Marketplace lending comprises transactions conducted through technology-enabled platforms including crowdfunded and peer-to-peer loans.

The property lending growth occurred “in spite of the very public collapse of Lendy and a sluggish housing market,” said Link Asset Services, which produced the index with Brismo.

LendInvest and Landbay both more than doubled lending collectively originating £334m more than they did during H1 2018.

As well, lenders specialising in development finance and longer-term BTL performed strongly.

Marketplace gross lending was “unexpectedly high,” growing by 24.3 per cent year-on-year to £1.5bn, in Q2, Link Mortgage Services said.

Net lending grew more slowly. 

Combined net lending for three of the largest lenders – RateSetter, Zopa and Funding Circle – fell by 21.7 per cent to £191m year-on-year in Q2.

Net returns have fallen consistently over the last two years and reached their lowest level on record at 3.8 per cent in Q2.

However, net yields remained stable at 7.2 per cent.

Link Asset Services has forecast that the sector will originate £6.2bn of lending in 2019, up 16.7 per cent, or nearly £900m, on 2018.

“Peer-to-peer and marketplace lending has witnessed a tumultuous year beset by controversy — not least Lendy’s fall into administration,” said Mark Davies, managing director at Link Mortgage Services.

“In spite of this, and economic and political uncertainty, marketplace lending continues to grow as platforms cover the funding gap left by traditional banks.

“However, as losses rise and the potential for an economic downturn looms, marketplace lenders are heading into new territory.

“Should the economy slow further, risk management, loan serving and recovery practices are likely to be tested significantly across the board,” Davies said.

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