P2P Lending Returns to Average 5%

Ever wondered what the average returns in P2P lending are? We wonder that all the time. We know average doesn't mean much, but, like most people, we're curious anyway.

We have just launched the 4thWay^® P2P Forecast Returns Index, which is the first index of P2P lending returns. It's not the big one in terms of academia. With this benchmark we're not going to get the cult status that those heroes at Credit Suisse's Global Investment Returns Yearbook do.

But for our purposes, and the purposes of most of you individual lenders, it is more than satisfactory. The index tells you what you can expect to get, on average, if you lend today, assuming all goes well. And it doesn't weight it in a way that is irrelevant to small lenders who are choosing for themselves which P2P companies to spread their money across.

The average returns you can expect if you spread your money across the largest lenders, accounting for around 85% of the market, is 5.06%. That's after fees and expected bad debts, but before taxes.

We aren't sure what to make of that figure yet. Not a lot probably, since almost none of you will be average. Already in my experience, certainly not 4thWay users!

The one things that stand out a little is that it's comfortably, usefully higher than savings rates, but not screamingly high. It's kind of reassuring.