As the credit crisis forces traditional banks to tighten their lending criteria, UK P2P loan market pioneer Zopa is reporting soaring interest from both borrowers and lenders.
Zopa says that between July and September an average of 3700 borrowers joined per month, compared to 2500 a month in the previous quarter.
Explaining the surge, Sarah Kennedy, head, customer proposition, Zopa says: "Clearly the tightened lending criteria at the banks is helping to drive borrowers to look for alternatives."
The number of lenders joining during the quarter also soared, up from 300 a month between April and June, to 500 a month. Zopa says these lenders have also been getting average returns in excess of 10% over the last couple of months, compared to 8.9% between April and June.
Kennedy says people with savings "are increasingly concerned for the safety of their deposits and can't make a decent return on significant sums of money at the banks either".
Launched in February 2005 by several members of the original management team behind UK Internet bank Egg, Zopa passed the 200,000 member milestone in July, with lending topping the £23 million mark during the month. The service is also growing internationally, with operations in the US and Italy and plans for a new site in Japan "in the near future".
Last week a P2P lending platform called Loanio launched in the US, specifically targeting customers with poor credit records, such as sub-prime borrowers.
Finextra blogger Ralf Hazell discusses the future of the P2P lending market in his recent post.