Published on April 14th, 2020 | by Jenny0
The latest on COVID-19 and Peer to Peer Lending
In our last article we detailed the potential affect that the Coronavirus outbreak could have on the peer to peer lending world. Whilst some forecasts can be made, the general uncertainty around how the situation will plan out in the UK means platforms are struggling to take on new business. Whilst we endeavour to give you knowledge to make your financial decisions on, everyone’s finances and circumstances are unique, and you should seek specialist advice before making any drastic changes in your portfolio.
- There has been a surge in demand for lending tapered by uncertainty
With the increase in business short on money, many have looked to the peer to peer lending market as a means of securing quick finance. Whilst this has created greater demand for peer to peer loans, a potential lack of supply through those willing to put their money on the market is impacting on the whole industry.
- RateSetter is looking for a buyout (or an acquisition)
Many different providers are facing a strain on their business, and RateSetter is one of them. With ambitions of taking the company public, the business is now focusing on a merger as a means of raising funds. The shape they want it to take is unclear and the changing situation probably isn’t helping.
- There has been an attempted exodus of investors
As is often the case when there is a sever affect on the supply and demand of an economy, the peer to peer lending market has seen an increase in retail investors looking to cash in on the loans they partake in. This is difficult, particularly given the general lack of liquidity many customers were experiencing prior to the Coronavirus outbreak.
- COVID-19 is changing the shape of the industry almost daily
Staying up to date with information if you have a sizable chunk of your savings in peer to peer lending is becoming increasingly crucial; however, it is also increasingly challenging given the changing situation. Indeed, Coronavirus is affecting every different industry in different ways. The lack of understanding of the timeframe we are operating in also makes it challenging to make predictions on the future.
Weathering the storm could be worth it in the long run
Whilst there is a big temptation to take your money out of peer to peer lending now, doing so early may mean you experience real loses. Choosing to weather the storm in this instance may be the best step to take for your finances till we have a better understanding about what the future may look like.