How marketplace lenders can offer better returns

Marketplace lending — or peer-to-peer (P2P) lending — has emerged as a simpler proposition for the property project loan sector than other more traditional lending options.

Many traditional lending overheads cover retail branch networks, real estate and staff, expensive to maintain legacy IT systems, city offices, substantial compliance costs, and more. A marketplace lender faces few of these costs and is able to apply significant efficiencies as a result.

To illustrate this, have a look at the chart below. A McKinsey study into P2P pioneer Lending Club (US) shows that Lending Club expects to be 60 percent more efficient than an “equivalent banking business”. Although this is a US study, the situation is very similar in Australia.

Source

The study says:

  • Lending Club expects to be 60 percent more efficient than the equivalent banking business, on costs as percent of loan balances
  • P2P has no expensive branches/legacy systems/expensive regulatory capital to service

By avoiding these overheads and offering an investment with slightly higher risk than a bank, marketplace lenders are able offer higher target returns*. In Lending Club’s case, up to six-fold higher returns than the banks in the study.

Australian investors currently have $450 billion in cash saving accounts earning less than 0.8 percent returns per annum . It is, of course, important to point out that traditional lenders like banks are heavily regulated, government backed, and cash savings have a much lower-risk profile than non-bank marketplace lending. However, for risk-aware and informed professional and wholesale investors, marketplace lending alternatives are emerging as an interesting option.

CrowdProperty Australia is a new non-bank, marketplace (peer-to-peer) lender where wholesale investors can invest in property project loans and earn up to 7% target interest returns* on first mortgage security.

If you’d like to find out more, please get in touch.

*Target returns, not forecast returns. For wholesale investors only. Terms, conditions and risks apply.

Or download our guide to investing with CrowdProperty

 

Download the guide to investing with CrowdProperty

 

 

 

DISCLAIMER

The CrowdProperty Investment Trust (the Trust) is an unregistered managed investment scheme. The Trust is only available to investors that are wholesale clients as defined in s761G of the Corporations Act 2001 (Cth).

Investors pledge their funds in the Trust which makes first mortgage secured loans to SME property developers.

Withdrawals can only be made when the Investor funds are in Cash Interests in the Trust. Refer to the Information Memorandum (IM) for more information.

CrowdProperty Pty Ltd (ACN 633 516 195) is the investment manager of the Trust (Investment Manager). The Investment Manager is a corporate authorised representative (No. 001285637) of Quay Wholesale Fund Services Pty Ltd AFSL No. 528 526, ACN 647 044 602. The Investment Manager's authority under its Corporate Authorised Representative Agreement with Quay Wholesale Fund Services Pty Ltd is limited to general product advice regarding the Trust only. Quay Wholesale Fund Services Pty Ltd is the trustee of the Trust and the issuer of its IM (Trustee).

The contents of this document are not intended as financial product advice and have been prepared without taking into account your personal circumstances, investment objectives or particular needs. You should read the Information Memorandum for the Trust in full to consider whether an investment is appropriate for you.

Neither the Investment Manager, Quay Wholesale Fund Services Pty Ltd, nor the Trustee guarantee the repayment of capital, the performance of any investment or the rate of return for the Trust. Past performance is not necessarily indicative of future performance. An investment in the Trust is not a bank deposit and is subject to greater risk than cash investment products including loans of income and part or all of the capital itself.

We strongly suggest that you seek your own professional financial or legal advice prior to any investment decisions.


27 May 2021

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