Peer-to-peer lending looks destined to spread into residential mortgage market

A global peer-to-peer (P2P) lender says the practice will one day move into residential mortgages in Australia.

Peer-to-peer lending, or crowdlending as some call it, is the practice of lending money to unrelated individuals, or ‘peers’, without going through a traditional financial intermediary such as a bank or financial institution.

Peer-to-peer lender ThinCats Australia CEO Sunil Aranha told Australian Broker that P2P lending has moved into the residential mortgages market in other places around the world and it’s likely that it will happen in Australia too.

“In terms of moving platforms into mortgage lending spaces, that has happened in the UK and the US and to a certain extent it will be something that will eventually happen in Australia,” he said.

“There is no reason stopping it, other than today it is not really attractive for anybody because the banks are doing it very well.”

Mr Aranha said it might not happen overnight, but it will happen.

“I don’t think peer-to-peer platforms have much of a part to play [in residential] right now, unless it can add value and the value it can add is to fractionalise lending. But eventually that will become a reality as it has in the UK and the US… That will happen,” he told Australian Broker.

ThinCats Australia has arranged loans to the value of $2 million since it launched in 2014, offering interest rates between 11.5% and 14.5%.  They are yet to move into the residential mortgages market.

“We are focused on business lending. There may be some loans that we do which are secured by second mortgages but the purpose of our loan will really be for a business to be able to use as a cash flow to grow their business,” Aranha toldAustralian Broker

“We want to focus on that market that is not serviced, and in my opinion, it is about $10 billion of un-serviced market — which means banks don’t actually lend to that market.”

Mr Aranha says he expects ThinCats to be providing over $1 million a month in 2016, and with solid growth like that it seems P2P lending is destined to spread into the residential mortgage market sooner rather than later.


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