Will share my thoughts, as had previously done some research on this for a presentation I did late last year.
P2P falls under consumer debt. The RBNZ statistics provides a breakdown between M1 (Consumer loans) and M2 (Housing loans) in its Household Balance sheet (see attached). It reflects that M2 has nearly quintupled over the past 20 years, while M1 has only doubled. From the peak of the GFC (approx Sep18), M1 has only increased by 20% whereas housing loans are 60% up. Infact housing loan lending INCREASED during the GFC!!!
In the Key household financial stats (interest on consumer loans (D2) and housing loans (D1)), the observable trend contradicts the above. And both consumer and housing loans follow the same trajectory since the GFC peak. The impact of successive interest rate reductions.
Interest rate increases will cause cataclysmic chaos for those holding housing loans, the focus of IMF risk. Consumer debt defaults will be impacted, particularly lender holding distressed housing assets... However history demonstrates that mortgage defaults during the GFC was higher that of credit card debt. Which could indicate that lenders valued their unsecured debt/availability over their distressed assets?
As investors believe that the most we can do is position ourselves given the current economic environment. I consider P2P investment as a defensive option, and believe returns will outstrip real estate investment and sharemarket loans over the medium term irrespective of when and if a recession occurs.
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Originally Posted by leesal
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