Assetz Capital one of the UK’s largest peer-to-peer lenders, announced it is predicting that both savers and borrowers will continue to turn to alternative finance companies in increasing numbers as Bank of England slashes interest rates from 0.5% to 0.25%. The website reported, peer-to-peer lending platforms remain largely untouched by the fluctuated financial markets and offers the same rates to investors and businesses as they did prior to the Brexit vote and the base rate decision.
Assetz Capital revealed, since launching in 2013, around £130 million has flown through its platform to credit-worthy borrowers, earning investors a total gross interest of more than £12 million to date and this lending is predicted to continue to rise rapidly. Stuart Law, CEO and co-founder of Assetz Capital, stated:
“It’s unsurprising that interest rates have fallen today as the BoE seeks to minimize the economic effects of a Brexit. Once again savers are set to suffer as traditional savings accounts become an even less attractive option. We are expecting savvy savers to continue to turn to the alternative finance market, which has matured and grown out of the effects of the last financial downturn, and get decent returns on their capital. Alongside the potential financial benefits, investors in platforms such as Assetz Capital can have a hugely positive impact on a local community and can choose which British SMEs they wish to support.”
Assetz Capital also predicted the number of business borrowers will also rise as a result of the cut interest rate. The website noted that as banks are expected to become more reluctant to lend in the current financial climate an ever-increasing number of businesses are turning to the alternative lending option to provide flexible, fixed rate loans, providing they pass the strict checks carried out by lending platforms. Law noted:
“For businesses in need of funding, P2P lending is becoming an increasingly attractive proposition. Fixed rate loans offered by platforms such as Assetz Capital provide businesses with a stable way to predict part of their finances, regardless of external market conditions. Generally speaking, loans are much safer for a business than overdrafts because banks can’t withdraw them on short notice and the large scale reduction in overdraft facilities is likely to continue even faster now driving more businesses to consider business loans to provide them more stability at a lower cost. Overall, the base rate cuts will further push savers towards alternative finance options. Both the critics and the backers of peer to peer are about to have their respective theories tested and matters currently appear to bode well for the latter being proven right.”
He then added:
“P2P Lending is definitely investment not savings and carries more risks but the returns are hundreds of percent more than a typical savings account and with a platform like Assetz Capital, security is taken on every loan to help protect the capital too.”