Loans available at a discount (AC)

Blimey 4% seems too good to miss.

Also, I don't think your return is right.  You also get the benefit of paying 96 up front but receiving 100 in 5 years time so the XIRR is around 6% which beats the 90DAA.  That gain is also tax free so for tax payers is an enhanced return.

FWIW if you want to calculate the return yourself then you could try the following...

The compound return assuming reinvestment of interest:
FV = P(1 + r/n)^(nt)
where, FV is the future value including interest
      P is the principal
      r is the annual rate
      n is the number of payments per year
      t is the number of years interest is paid for
and the effective annual rate is:

effective = (FV/PV)^(1/t) - 1
where, effective is the effective annual rate
      PV is the present value (or cost) of the principal
With P = £100, PV = £96 (i.e. 4% discount), r = 5%, n = 12, t = 5 then FV = £128.34 and effective = 5.98%

I've done this from memory so apologies if there are errors and as always please DYOR

Edit: a single formula solution:

effective = [(1+r/n)^(nt) / (1-d)]^(1/t) - 1
where, effective is the effective annual rate
      r is the annual rate, %
      n is the number of payments per year
      t is the number of years interest is paid for
      d is the discount on the principal, %

Yeah but it's just the swings in supply and demand.  It's the nature of P2P, they don't have a banking licence so they can't 'print' money so it's very hard for them to exactly match demand with supply.

Yes the loans that are in the first month are just underwriters offloading.  It's not a huge amount of money and most of it is discounted at 1% (the 3% and 4% discounts are tiny size).  It's driven by a large amount of supply which isn't matched by the equivalent demand.  Go back a month and it was the other way round.  The Xmas break means there is a dearth of loans and then typically you get a wave of loans all coming at once (is the same after the summer break).  I expect demand will pick up as we move into March and people start taking advantage of their ISA allowance and the situation may well reverse.

I wouldn't get nervous about the promotional offers.  It's just a way to grow demand.  They are paying a sum of money to increase money into the platform.  They could ditch the offers and spend the same money on advertising (as the likes of FC, Wellesley etc have done) but it's much better for lenders that the money gets paid direct to them in my view.  I invest in the loans that I think are strong  so it doesn't worry me in the slightest...in fact I have added significant funds in the past few weeks to take advantage.

Sounds very positive   

I suspect one the issues is that 5-7% loans are not popular with MLA investors (particularly at a lower end).  I personally don't see any point investing in 5% loan (even if it sounds strong) when I can put the same amount in 30day and get my 5.1% on the 1st of each month (with the benefit of PF and without worrying about the progress of each loan).  Also considering other offers on p2p market, anything below 7% without PF coverage doesn't sound attractive to me.

I agree on "advertising" - "promotional offers" is much better use of money.  

Out of self-select platforms/accounts I'm using, I can't think of any offering as little as AC.