Will P2P lending be the only way to earn interest on your money?
David Cameron has said it would be “lovely” for interest rates to remain at historic lows “forever” because it will allow families “to buy the homes they can afford”. The Prime Minister said that Britain’s low interest rates are “good news” because it has made owning a home more affordable.
What he seems to have forgotten are the people who have been financially prudent, saved money and relied on those savings to generate much needed additional income. From 1975 to 2008, the average Bank of England base rate was 8.6% but since 2009 it has fallen to 0.5%. Savers have lost 95% of their potential income from savings in the bank!!
Recently, Sir Jon Cunliffe, BOE’s Mr Carney’s deputy, said rates could remain low “for a longer period that previously thought” because weak wage growth is keeping a lid on inflation.
P2P lending could be one of the few routes that cash rich individuals have to earn monthly income to supplement their regular income or pensions. The current government consultation on including P2P lending within an ISA wrapper would also allow P2P lenders to earn that interest tax free.
P2P Lending Platforms can offer savers a real income alternative.
It should be noted that although P2P lending platforms are FCA regulated, they are not covered by the Financial Services Compensation Scheme.