Peer-to-peer lending for downpayments on the rise

Several major internet companies have launched peer-to-peer lending ventures, partnered with real estate developers and other financial institutions, to offer homebuyers loans to cover the 30% downpayment required for a commercial bank mortgage, The Financial Times reported. Traditional banks are not allowed to provide downpayment loans, which remain a major obstacle to many buyers – but there’s currently no restriction on interpersonal lending and micro-lending. The P2P industry is expected to reach RMB100 billion (US$16.3 billion) by the end of the year, up from RMB5.6 billion at the end of 2012. Nonetheless, many concerns exist regarding the risk involved with these loans, with 115 P2P companies already going out of business this year.