Marketplace lending can be generally described as an arrangement through which people invest money, seeking to earn a return, which is then lent to borrowers, being consumers or a business. It is also commonly referred to as peer-to-peer lending. You can read more about it here.
According to data from the corporate regulator, new borrowing increased 45 per cent to $433 million in the 2017-18 financial year.
The ASIC report also revealed that the average interest rate charged by marketplace lenders increased over the financial year, from 10.5 per cent to 11.5 per cent.
However, average interest rate on each dollar borrowed during 2017-18 was 11.6 per cent, down from 13 per cent for 2016-17, which ASIC said suggests that lower interest rates are being provided by operators for larger loans.
A tough market
A combination of factors, such as caps on investor lending and the scathing findings of the royal commission, have led to a tougher market for investors seeking credit in 2019.
According to recent research from Digital Finance Analytics earlier this year, the home loan rejection rate is up 32 percentage points year-on-year.
A survey of 52,000 households found that approximately 40 per cent of home loan applications were rejected in December 2018, up from 8 per cent in December 2017.
When divided into segments of the lending space, the highest rate of rejection was for refinance applications (48 per cent), followed by investors (11 per cent) and first home buyers (5 per cent).
To learn more about how you can get your finance approved in the current environment, click here.