Cost of borrowing via peer-to-peer lenders will fall, says sector boss

Businesses could have access to lower cost finance through peer-to-peer (P2P) lending schemes, as the returns on such loans are expected to drop.

According to the boss of one P2P platform the range of interest rates on loans via the model will reduce as the market matures in 2014.

Stuart Law, CEO of Assetz Capital, says increased capital from investors will permit platforms to offer lower rates to businesses, while the lowest rates in the market will increase as default risk becomes more transparent.

Mr Law said: “There’s been a rush towards P2P investments in the past 12 months, and there are no signs of let up.

“Experienced investors get it, and 2014 will see P2P investment truly enter the mainstream when the FCA regulation kicks in.

“There’s no doubt that the sector will grow with or without Government involvement, but with regulation, injection of Government funds for lending and the likely incorporation of P2P into ISAs comes validity which will lead to continued exponential growth in the sector.

“Next year will be huge for the industry, and therefore investors – but let’s keep an eye on the future as I believe that P2P loans could be a part of as many as 50% of investment portfolios within five years once ISA inclusion is confirmed.”