Can P2P step in again to help rate-starved savers?

July 04, 2017 • By TAB Content

A report released last week from the ONS states that the savings ratio - the amount a person sets aside for savings from their disposable income - has been falling sharply, currently sitting at 1.7%, down from 3.3% in the previous quarter. Part of the reason for this ratio falling is that investors and savers are seeing no return on their cash. 

This report follows a study from Moneyfacts that stated savers face a "never-ending battle" to get a healthy return on their cash, an outlook that isn't set to change anytime soon. Alarmingly, the Moneyfacts study said that 9 out of 10 easy access savings accounts are paying interest less than 1%, and a third of easy access accounts failing to even pay a rate matching the Bank of England base rate of 0.25%. 

In this low-rate environment, can P2P step in to provide a solution for savers who see little point in saving, seeing as rates have remained so low for so long? 

ZOPA is currently offering 3.9% via its Zopa Core product, and 6.1% via Zopa PlusRateSetter's Everyday Account is even offering an annualised 1.7% or a current rolling rate of 2.7%. Funding Circle claims to offer an annualised 7% on savings invested. So, in comparison, P2P seems to be offering an attractive alternative. 

With bank rates set to stay low until at least the end of the year, this seems another argument in favour of P2P. It will be interesting to see the P2P market's reaction when rates return to more normal levels but, for now, P2P should be interesting all cash savers.