Savers are being lured into lending cash through money-exchange loans websites just as losses from other customers start to climb.

Zopa, the UK’s largest money exchange ‘peer-to-peer’ website, has seen a sharp rise in the number of borrowers failing to repay debts.

For every £1,000 a saver lends to a borrower, £9 will go unpaid — up from £7 18 months ago. This cuts into the returns of the lender, who offers their money at rates of around 6.5 per cent.

Peer-to-peer lending: Savers are lending more cash then ever - just as number of borrowers failing to repay debts rises

And smaller sites have seen much higher rates of default. Yes-Secure’s average bad debts are at 7.22 per cent, which leaves investors running the risk of losing more than £70 for every £1,000 lent.

Peer-to-peer websites allow borrowers who might not be able to get cheap loans from banks to borrow money directly from other consumers.

Instead of placing your cash in a deposit account, you ‘lend’ your savings to online borrowers at an interest rate of your choice, from 6 per cent to as high as 25 per cent.

Last month, we revealed how peer-to-peer website Quakle closed down, leaving hundreds of lenders in the dark over whether they had lost their cash.

But while concerns are growing about the returns given by these companies, some are seeking alternative ways to encourage new customers to lend.