Peer to peer lender RateSetter writes $7 million of loans since last November
Since it started its operations in Australia last November, peer to peer lender RateSetter, has written $7 million of loans with investors committing to an average funding of just over $6000.
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RateSetter is an online marketplace where people lend and borrow money. The company has been functioning in the UK for several years and if Australia follows the same lending pattern, the company is confident that investors will soon start raising their funding.
RateSetter Australia chief executive Daniel Foggo said the company had written $7 million of loans since opening in Australia last November, with the average loan size a little over $16,000.
Foggo said the performance of the portfolio was good, with only a couple of loans in arrears and no defaults.
The average age of borrowers is 40, with an average income of $90,000 and half of them are home owners. The most common reason for borrowing is to purchase a car. Foggo said this was also the most common type of loan in the UK.
Loan pricing on RateSetter is carried out on a "last match rates" basis. Lenders post the price at which they are prepared to lend and borrowers post the rate they are looking for; when there is a match the transaction proceeds.
Foggo also added that, as activity builds on the platform, rates are coming down. For instance, the rate on a five-year loan has come in from ten per cent to 9.5 per cent so far this year, while the rate on a three-year loan has come in from 8.5 per cent to 7.5 per cent. The rate on a one-year loan is around five per cent.
In the UK, RateSetter investors have an average investment of £20,000 and Foggo said he expected the investment amount to trend up to that level in Australia as well. About ten per cent of investors are self-managed superannuation fund trustees.
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