4thWay P2P And Direct Lending Index: Q1 2026
Online direct lending, including P2P lending, had its worst month in its history in January 2026, with investors losing money overall for the first time
For the first time since the 4thWay PADL Index started in July 2014, lenders lost money overall over the course of a month.
In January 2026, lenders were poorer by the end of the month by 0.12%.
For the quarter, lenders were still up overall, but by just 0.75% – or £7.50 per £1,000 invested – making it the worst quarter investors in online direct lending have ever had.
January 2026 was the only month in 140 months (11 years and eight months) that lenders had negative returns.
The losses were driven by development lending that was funded in 2021 to 2023, which became an excruiatingly difficult period for property builders starting their projects at that time.
The graph is not smoothed but actual results over time.
Over the medium and long run, online lending returns at 7.72% pa have considerably outpaced the stock market's 6.51% pa.
Put another way, £10,000 became £23,800 in online lending, versus £20,881 for the stock market.
Key numbers
Stability: number of calendar years with positive returns
P2P and online direct lending: 11/11.
Stock market: 8/11.
Calendar year head-to-head matchup: which performed best?
P2P and online direct lending: won 5/11 calendar years.
Stock market: won 6/11 calendar years.
Longest losing streaks
P2P and online direct lending: 1 month2.
Stock market: 6 years 3 months3.
Years losing to inflation4
P2P and online direct lending: 1/11 years.
Stock market: 4/11 years.
Shorter-term risk: comparison of volatility with the stock market
Market size
P2P and online direct lending: constituents have a total outstanding lending volume of over half a billion pounds.
Stock market: companies listed on the FTSE 100 are valued at £2.5 trillion.
Primary constituents
The table below shows the types of lending available today and the rates currently available for investors who start lending today, before any bad debts.
| Provider/ model |
Description | Current lending rates |
| CapitalRise*/ DL(4) |
Prime development lending with negligible capital losses | 10.41% |
| CapitalStackers*/ P2P(4) |
Mezzanine and stretch development lending | 13.49% |
| CrowdProperty/ P2P |
Mostly development lending | 8.96% |
| Loanpad*/ P2P |
Bridging and development lending under 56% LTV, no losses | 5.80% |
| Proplend*/ P2P |
Commercial property lending with investment income, negligible losses | 7.91% |
| Somo*/ DL |
Bridging lending, mostly second charge, no capital losses | 9.22% |
Find out more about these and other providers in the comparison tables.
4thWay PADL Index methodology and inclusion criteria
The 4thWay P2P And Direct Lending Index (PADL) starts from the end of July 2014 and shows actual returns after costs and credit losses.
All online direct lending, including peer-to-peer lending, is eligible for inclusion in the 4thWay PADL Index, provided the data supplied to 4thWay is verifiable and meets high standards.
Using detailed data from the lending platforms, 4thWay takes the way many bond indices are calculated as a minimum standard.
Bond indices typically take the loan amount, rate and term, and extrapolate the amount made by investors based on generating a schedule while marking down bad debt as it is written off or charged off.
4thWay’s methodology improves on that by using intra-loan events, such as additional default interest paid out to investors and actual cash flows where possible.
Further reading
1. Stock-market comparison figures are based on data on the FTSE 100 total returns index (i.e. including reinvestment of dividends) from Curvo and Investing.com, after estimated wrapper and fund costs, fees and expenses of 1%, which is conservative compared to most share investors’ frictional costs.
2. There has just been one losing period for P2P and online direct lending, lasting one month, which was the month of January 2026.
3. FTSE 100 total returns after costs saw share investors with a smaller investment pot on 31 October 2020 than they had at the end of July 2014.
4. Inflation is based on what is widely considered to be the most accurate measure: the CPIH index.
5. “P2P” means the platform model is based on Article 36H P2P agreements. “DL” means the platform operates using one of several other direct lending models, or models that effect the same for investors. All models effectively mean that the end borrower borrows from the end investor, substantially reducing the risk of losses to investors if an investment platform closes down, switches business model or goes insolvent.
Independent opinion: 4thWay will help you to identify your options and narrow down your choices. We suggest what you could do, but we won't tell you what to do or where to lend; the decision is yours. We are responsible for the accuracy and quality of the information we provide, but not for any decision you make based on it. The material is for general information and education purposes only.
We are not financial, legal or tax advisors, which means that we don't offer advice or recommendations based on your circumstances and goals.
The opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by ESMA or the FCA. All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.
*Commission, fees and impartial research: our service is free to you. 4thWay shows dozens of P2P lending accounts in our accurate comparison tables and we add new ones as they make it through our listing process. We receive compensation from CapitalRise, CapitalStackers, Loanpad, Proplend and Somo, and other P2P lending companies not mentioned above either when you click through from our website and open accounts with them, or when you make an investment, or to cover the costs of conducting our calculated stress tests and ratings assessments. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.
