Archive for the ‘ Market Survey ’ Category

Tomorrow Prosper will mark its two year anniversary. Since launching on February 13, 2006, Prosper’s funded loan volume has grown to over $117 million, up approximately $81 million or 225% from its first year. Prosper’s national membership now consists of over 580,000 individuals, up approximately 405,000 or 230% over the same period.

“We’re looking forward to formally celebrating our two year anniversary and the community who pioneered people-to-people lending in America - Prosper lenders and borrowers – at our second annual Prosper Days conference,” said Chris Larsen, co-founder and Chief Executive Officer of Prosper. “Together with Prosper community members and social lending experts, we will assess our first two years and provide a glimpse of what’s in store for the future.”

January 2008 Prosper People-to-People Lending Market Survey

Membership and Loan Volume Statistics

Estimated Annual Return on Prosper Select Index

Average Borrower Rates on Prosper Select Loans

Mix of Funded Borrowers

Definitions

Since Inception: November 1, 2005 through January 31, 2008. Prosper’s by invitation only “friends and family” launch began on November 1, 2005 and Prosper launched to the general public on February 13, 2006.

Prosper Select Index: The Prosper Select Index return is the estimated average annual return on principal, based on actual delinquency performance to date. The Prosper Select Index includes AA - E credit grade loans for borrowers whose credit reports at the time of application indicated zero current delinquencies, three or fewer credit inquiries, and a debt-to-income ratio of 40 percent or less. The annual return period reflects loans originated in the twelve month period ending one month prior to the observation date of January 31, 2008. Prime Select includes AA and A credit grade loans (credit scores of 720+). Near Prime Select includes B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime Select includes E credit grade loans (credit scores between 560 and 599).

Average Borrower Rates: Average Borrower Rates are the weighted average borrower rates on Prosper Select Index loans with loan amounts between $5,000 and $10,000. Rates shown are interest rates, not annual percentage rates.

Mix of Funded Borrowers: Prime includes all AA and A credit grade loans (credit scores of 720+). Near Prime includes all B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime includes all E and HR credit grade loans (credit scores below 600).

Chris Larsen CEO of Prosper provided the commentary in the December 2007 Marketplace Survey. He places the Prosper Marketplace in the larger context of the “subprime” meltdown including the credit crunch that is being seen nationwide. His assertion is that all aspects of lending are affected by the credit tightening including the Prosper marketplace. Lenders are requiring better rates of return for carrying risk and in general are less willing to carry riskier loans.

People-to-People Lending Marketplace Survey December 2007

Membership and Loan Volume Statistics*

Estimated Annual Return on Prosper Select Index*

Average Borrower Rates on Prosper Select Loans*

Mix of Funded Borrowers*

* For definitions please see see the survey

Kirk Inglis, Chief Financial Officer of Prosper.  Quote: “The $100 million milestone is a reminder that Prosper’s rich and unique set of historical performance data has the potential to benefit both lenders and borrowers.  The free flow of information is the cornerstone of any successful marketplace and Prosper is committed to making its marketplace data transparent and accessible.”

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Kirk Inglis is the CFO of Prosper.

In last week’s Wall Street Journal article “Interest Rates Defy Rate Cuts,” James Bianco, president of Bianco Research LLC, a market-research firm in Chicago said, “Even though the Fed has eased three-quarters of a percentage point since September, the market has only gotten between 0.25% and 0.50% of that easing. If you look at it from a saver’s and borrower’s side, it shows you that the market is still not functioning properly.”

Although borrower rates and lender rates of return on Prosper are not formally tied to moves by the Fed, the dynamics of the broader credit markets, which have led to a string of rate cuts, clearly seem to be having an impact on the Prosper marketplace. For example, in October average borrower rates for all Prosper prime loans and Prosper Prime Select loans were 12.27% and 9.50%, respectively; down 0.39% and 0.65%, respectively, since the Fed rate cuts.

Continue reading Lower Borrower Rates, Fewer Subprime Loans Funded

When the Fed cuts interest rates people often expect mortgage rates to drop. However, this is rarely the case given that mortgage markets typically anticipate rather than react to moves by the Fed. On the flip side of the coin, the variable credit card and savings rate markets react sometime after the Fed moves. In fact, some variable credit cards have a 90-day window to make adjustments reflecting the rate cut.

So the question is: did the Prosper marketplace anticipate or react to the Fed rate cut?

Continue reading Did Prosper Anticipate or React to the Fed Rate Cut?