Peer-to-peer (P2P) lending is likely to move into residential mortgages in Australia, according to a global peer-to-peer lender.
Speaking to Australian Broker, the CEO of ThinCats Australia, Sunil Aranha, P2P lending globally has already moved into residential mortgages so it is likely that Australia will follow suit.
“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. There is no reason stopping it, other than today it is not really attractive for anybody because the banks are doing it very well,” Aranha said.
“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.”
However, Aranha said ThinCats, which operates in the SME lending market, is unlikely to move into residential mortgages.
“We are focussed 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 told Australian 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.”
Since ThinCats Australia – which is 25% owned by leading UK P2P lender, ThinCats UK – launched in December 2014, the platform has arranged loans aggregating close to $2 million to date at interest rates ranging from 11.5% to 14.5%.
The platform has also just welcomed well-known finance commentator, Alan Kohler, as a shareholder.
Looking at 2016, Aranha told Australian Broker that he expects ThinCats to be providing $1 million a month in loans to Australian SMEs.
“In terms of pipeline, I believe that by the second quarter of next year we should be actually doing $1 million plus a month,” he said.
“That is the growth we are currently on so by the end of next year I hope to actually say that purely on organic growth, without something sudden and exciting happening, we should be able to do about $8 million to $10 million next year.”
