Tech will lead to new sub-prime crunch

In October 2016, two leading P2P platforms in the U.S. -- Lending Club and Prosper -- announced a new increase in interest rates for lower-grade loans. The decision was made in order to sustain investor demand, as the model platforms are operating under challenges faced during the last months due to compliance issues with Lending Club and the general turbulence of the P2P lending industry. However, keeping the investor demand stable is not the only reason for recent changes -- as Lending Club announced, delinquencies are growing, especially when it comes to high-risk loans. October 2016 was not the first time P2P platforms changed their interest rates that year. Initially, the decision was caused by the Federal Reserve to raise interest rates in response to signs of a stable and strengthening economy in December 2015, following a period of low rates designed to promote quicker economic growth in the U.S. and worldwide after the financial crisis.