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Peer to Peer lending and the European real estate market: evidence from UK

Author

Listed:
  • Lucia Gibilaro
  • Gianluca Mattarocci

Abstract

During the last decade a lot of on-line platforms were developed in order to support the peer-to-peer lending (hereinafter) especially in the consumer loan sector. After the success of the new product, new market players decided to diversify their activity including also other sectors that can benefit from the P2P mechanism including the real estate market.With respect to the P2P concept, real estate offers the additional opportunity to reduce the overall risk assumed by investors through the value of the guarantee always related to the mortgage. Using data from one leading player specialized in real estate lending in UK (Landinvest) the paper will compare the characteristics of the loans offered though on-line platforms with respect to standard loans offered by the UK financial intermediaries. Results show that the peer-to-peer lending is more concentrated in some geographical areas or type of asset and also some of the contract features of P2P lending are not comparable with average of alternative financing solution available for financing comparable assets. Results support the hypothesis that the growth of the P2P lending is driven by the needs of potential debtors that are not addressed by the standard lending channel even if they can afford to pay above the average interest rates with respect to standard loans.

Suggested Citation

  • Lucia Gibilaro & Gianluca Mattarocci, 2016. "Peer to Peer lending and the European real estate market: evidence from UK," ERES eres2016_234, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2016_234
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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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