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Social lending will account for 10 per cent of the personal loan market by 2010, according to a report by research company Gartner.

Zopa, the social lending website launched there years ago, looks set to pave the way for a new type of lending as a report predicts peer-to-peer lending could account for a tenth of the personal loans industry in just two years. The enterprise, which was launched in 2005 by members of the team that set up Egg, has attracted more than £18m of backing and has more than 190,000 members in the UK. In the wake of tightening credit conditions, the enterprise revealed record number of people approaching to borrow money at an affordable and manageable level.

Since its launch, the enterprise has arranged more than £20m in unsecured personal loans in the UK and is preparing to launch in Japan, its fourth country after Italy and the US since it launch in the UK.

The appeal of social lending was recognised in a report from research company Gartner, predicting peer-to-peer lending would represent 10 per cent of the personal loan market by 2010.

Giles Andrew, co-founder and managing director of Zopa, said: "With recent average returns for lenders the best they have ever been at 8.1 per cent, with some enjoying more than 10 per cent, social lending has never looked so attractive. Borrowers continue to enjoy rates normally much lower than they can get from the banks, and despite months of turmoil in the credit markets, our state-of-the-art credit and affordability checks have maintained our remarkably low default rate at less than 0.1 per cent."

He added: "We are delighted to be celebrating our third party with news of our upcoming launch in Japan. We look forward to helping even more people around the world enjoy the big benefits of cutting out the banks by borrowing and lending with other people instead."