Could be the 1st real test of the P2P Industry

I suspect it's priced in already.  

If it isn't, or if it really does prove to be "the first true test of P2P", then P2P doesn't deserve to continue as an asset class / way of doing business.  

A fairly conventional (local G8) economic view of a US rise, followed by a UK rise (assuming it's small) would be that macro flows tend towards US / UK govvies, the search for yield sees slightly less pressure, down pressure on consumer / business spending and investment and real estate valuations, a possible rise in retail deposit rates, and downward pressure on equity markets (but god knows they're toppy as it is).

Without any substance to base my bet on, all in all I think that could be good for P2P.  Rates could (should?) rise to compensate for higher rates available at "safe" banking institutions.

Interestingly I was talking to a fund managing friend of mine about the upcoming sale of Lloyds shares.  She said, almost verbatim, "the industry sees them as a buy due to the expectation of higher mortgage margins".

Not a lot of room for that . Negative rates would be... unorthodox (not that they are unheard of), but then again so is QE. Long term I'm far more concerned about how QE unwinds itself. I don't think anybody really understands this.....

True test in what way?

Some upset customers for lower rate P2P like RateSetter and to a lesser extent Zopa when people trying to sell discover how expensive it is to match higher market rates there. More trouble if current rates substantially exceed past rates and there are more widespread attempts to withdraw to relend at a higher rate and people at those discover it's expensive to do. If normal savings accounts exceed the P2P rates it'll matter more and short term lending in some monthly P2P or Wellesley might see more widespread withdrawing for this reason. But not universally, after all, they do have money inflow today at lower higher rates than are available elsewhere in P2P.

Beyond that? Not so much in the way of consequences for a while. Eventually those with offset mortgages will find the mortgage offset account paying more than P2P and will withdraw to use that but I don't think there's enough of this to make a big difference. After a while those with flexible mortgages might make the same move when the rates make it worth doing.

Higher rate P2P should be fine because there will still be a significant margin above bank rates and the relative change in interest rate will be lower even if rates do increase. Liquidity for older loans might evaporate on par-only secondary markets, though. I don't see a high buyer volume at old par rates when new par rates are say 2% higher and with no opportunity to discount to match the rate the result may be lock-in unless there is a sufficiently high demand or loans to mask the effect and keep the lower rates attractive on the "that's all there is to invest into" basis.

Hmm, my minimum needed P2P zero loss return rate is 3.0%.

I suppose everyone will be different. (HR taxpayers on offsets may well be a touch higher, whereas cash rich, low income pensioners mortgage free may well just need anything above 0%)

A 1% rise would see me cashing out of Club Lloyds, not Ratesetter though.

Wouldn't rates on Ratesetter/Zopa and the other low risk; low reward p2p Cos head up with any BoE rise though ?

We don't know how a rate rise in the US would affect the UK's P2P market, but I doubt the UK gov. would wait a full year to change rates after the US raised rates.

The US and UK rates have run in very close proximity since 2009

I tend to agree with Financial Thing - the BoE will track the Fed with very little lag, primarily to defend the currency.

Some of these P2P companies seem like they're flying by the seat of their pants so I doubt they are pricing anything in much further than the current day. I see the ISA's as being a double edged sword. The sharper side being too much money, too few loans. The sharp side, more public attention brought to P2P leading to more loans. Only time will tell.

Somehow I can't see old Ted & Mildred fiddling with the bidding sites like RS or REBS or with the complicated sites like AC or TC. Plus as I understand, you can't spread your ISA around so you have to put all your dough into one platform? I think that will stop some of the influx of cash. What worries me more are companies like InvestUp who will provide a basket of platforms for people to put their money into, making P2P less complicated for the average folk.