P2P lender surpasses $150m in loans

by Miklos Bolza21 Sep 2017
Peer-to-peer lender RateSetter has now reached the $150m mark in loans facilitated thanks to a rapid influx of lenders into the platform.

Millennial investors have helped to drive this growth, especially in RateSetter’s one-month market where these younger demographics make up 72% of the lender’s investors since the firm launched in 2014. This is followed by the one-year market where Millennials make up 40% of all investors.

“Far from wasting money on avocado toast, these young investors are seizing the opportunity to make their money work hard. For a variety of reasons they may want ready access to their money, so the one-month market gives them a stable, attractive return of around 4% p.a and easier access to cash if they need it,” said RateSetter CEO Daniel Foggo.

Investment in the platform has risen by 50% over the last five months alone after RateSetter hit the $100m loan milestone in March. There are now more than 7,700 investors registered with the platform, making RateSetter the largest P2P lender in Australia.

Foggo said that RateSetter had reached the $150m milestone sooner than anticipated because it provided added competition to the banking sector.

“We are giving everyday Australians a genuine alternative to traditional investment options; offering far more attractive returns across both our short term and longer term markets.
 
“Our growth has also been supported by banks doing a fantastic job of destroying the trust their customers once held. An increasing number of younger investors are showing they trust new economy services, including peer-to-peer lending, rather than traditional institutions, to act in their interests and help them achieve their financial goals.”

While younger investors seek more short-term lending options, older investors have more of a bias towards longer-term alternatives. A full breakdown of RateSetter’s data can be found below:
 
  Millennials Gen X Pre-retirees Retirees
1-month 72% 71% 59% 57%
1-year 40% 42% 47% 52%
3-year 39% 51% 56% 61%
5-year 36% 43% 44% 44%

For the one-month market, the average amount invested has increased from $3,777 two years ago to $11,483 today.

“RateSetter’s savvy investors are making their money work hard. Instead of leaving it in accounts offering poor returns, they are seizing the opportunity to earn a decent rate of return, even if it’s only for a month”,” Foggo said.
 
“Younger Australians realise that they won’t get ahead by leaving their cash in a low interest rate bank account, so they are prepared to take a small amount of risk to earn better interest rates.”

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