LONDON, May 24, 2011 /PRNewswire/ -- The scandal of PPI has been seen as some as a victory for consumers, and another kick for the embattled banking industry. In the same week, a report told us that average credit card rates have reached a 13 year high. This week, we hear that personal loan rates are following suit.
In short, consumers are picking up the bill for the cost of the banks' mistakes.
As a result, peer to peer finance company RateSetter (rollover: Peer to Peer Lender; hyperlink: http://www.ratesetter.com) has seen business booming, breaking the GBP4m in loans matched barrier on 23rd May. In particular, it has enjoyed a spectacular increase in 1 and 2 year "rolling" loans, which now comprise some of cheapest credit (rollover: low cost loans; hyperlink: http://www.ratesetter.com) available to consumers.
The bills of PPI, in conjunction with a change in regulation over how much equity banks must hold against consumer debt, has had the consequence widening the gap between what bankers pay their Savers, and what they charge Borrowers. In short, consumer finance has become expensive business for them. Peer to peer finance (rollover: Peer to Peer Lender; hyperlink: http://www.ratesetter.com), with its lower cost business models, is thriving in this landscape.
Rhydian Lewis, CEO of RateSetter, said "We've been amazed by the success of our Rolling Loans (rollover: Rolling Loan; hyperlink: http://www.ratesetter.com/ratesetter_one_year_loan.aspx) - it has increased from 22% of our business in January to as much as 65% in April and May. RateSetter's Rolling Market has become the "Loan of First Resort" for consumers wanting a good value loan. In return, Savers are keeping abreast of inflation, earning 4% plus with monthly access to their money."
RateSetter is a peer to peer finance (hyperlink: www.ratesetter.com) company, launched in October 2010. It is the brainchild of Rhydian Lewis, formerly a Lazard investment banker.
RateSetter matches creditworthy borrowers looking for a 1-3 year low cost loan (hyperlink: http://www.ratesetter.com), with Savers looking to earn better returns on their savings by lending money (hyperlink: http://www.ratesetter.com) out. It is unique in the marketplace as the only peer to peer finance provider to offer a Provision Fund (rollover: RateSetter Provision Fund hyperlink: http://www.ratesetter.com/lending/credit_process.aspx) that shields Savers from the risk of bad debt.
RateSetter has matched over GBP4m in loans since inception, with no defaults as yet.
* Sources: Evening Standard, 13th May 2011. http://www.thisislondon.co.uk/standard-business/article-23949786-banks-hiking -their-fees-to-pay-for-ppi-compensation.do
MoneyFacts, 23rd May 2011 http://moneyfacts.co.uk/news/loans/loan-warning-as-rates-hit-ten-year-high230 511/
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