Assetz Capital says it will close its retail investment platform due to “prevailing market conditions caused by the rapid rise in the base rate”.  

The specialist platform lender anticipates it will run off its retail loan book over five years.     

It adds that institutional capital, which has provided 80% of all of the firm’s lending since 2020, will “become the principal capital source from now onwards”.    

The business says the closure of its retail platform will not impact any current lending, “all of which will be fulfilled as expected for borrowers.   

“It will not impact planned new lending either, which will continue to be funded by the appropriate institutional capital that Assetz Capital has available.”  

The company points out that its retail investment arm emerged in response to the ultra-low interest rate environment in the decade following the financial crisis of 2007/8.   

It adds: “However, as a result of once-in-a-generation inflation, war in Ukraine and turmoil caused by 2022’s political and economic policy events, interest rates have moved upwards on what now looks like a semi-permanent basis, negatively impacting the retail investment proposition.”  

The firm, which emerged as a peer-to-peer lender, points out that after increasing interest rates in the third quarter of the year, “it continued to see modest net outflows from its access accounts.   

“Now, after consulting directly with its investor base, Assetz Capital has determined there is not sufficient demand from retail investors for these services.”   

The move comes as the Bank of England’s Monetary Policy Committee today hiked interest rates by 50 basis points to 3.5% to combat rising prices, the highest rate for 14 years. The ninth consecutive hike since last November when rates stood at 0.10%.   

Assetz Capital chief executive Stuart Law says: “We are incredibly proud of what we have achieved in partnership with our retail investors.   

“Assetz Capital provided significant returns for investors over a decade where interest rates languished at nearly 0%.   

“At the same time, our partnership with our retail investors has been critical in pushing us to our first billion in lending, and in the process delivering £1.5bn of desperately needed new housing, while supporting countless SMEs who have been unable to secure finance through traditional sources, like major banks, the public sector or other institutions.   

“Given market conditions, retail investors now have more choice over bank savings products than at any time in the last decade and this has reduced their investment appetite as a result.”