San Francisco – October 9, 2007 – Prosper (www.prosper.com), America’s largest people-to-people lending marketplace, today released its September People-to-People Lending Market Survey. Prosper’s People-to-People Lending Market Survey provides key statistics and a market commentary by Chris Larsen, Chief Executive Officer and Co-Founder of Prosper.
Prosper’s People-to-People Lending Market Survey is released on the second Tuesday of every month. To register to automatically receive the survey, send an email with “SUBSCRIBE” in the subject line to: p2plendingmarketsurvey@prosper.com.
September 2007 Prosper People-to-People Lending Market Survey
Membership and Loan Volume Statistics
|
|
September 2007 |
September 2006 |
2007 Year-to-Date |
2006 Year-to-Date |
Since Inception |
|
New Members |
28,683 |
12,988 |
270,866 |
79,680 |
437,316 |
|
Funded Loans |
$5.4 million |
$3.1 million |
$62.1 million |
$16.8 million |
$90.5 million |
|
Average Loan Size |
$7,175 |
$5,117 |
$6,986 |
$4,740 |
$6,096 |
|
Daily Average Number of Borrower Listings |
2,298 |
1,202 |
2,213 |
780 |
1,406 |
Estimated Annual Return on Prosper Select Index
|
|
September 2007 |
|
Prosper Select Index |
9.75% |
|
Prime Select Index |
9.01% |
|
Near Prime Select Index |
10.14% |
|
Sub Prime Select Index |
13.20% |
Average Borrower Rates on Prosper Select Loans
|
|
September 2007 |
August 2007 |
September 2006 |
2007 Year-to-Date |
2006 Year-to-Date |
Since Inception |
|
Prime Select Loans |
9.98% |
10.15% |
10.15% |
10.02% |
10.63% |
10.12% |
|
Near Prime Select Loans |
15.83% |
16.83% |
16.03% |
15.92% |
16.15% |
16.08% |
|
Sub Prime Select Loans |
24.86% |
25.88% |
23.44% |
23.38% |
25.18% |
23.97% |
Mix of Funded Borrowers
|
|
September 2007 |
September 2006 |
2007 Year-to-Date |
2006 Year-to-Date |
Since Inception |
|
Prime |
30% |
21% |
30% |
26% |
28% |
|
Near Prime |
62% |
56% |
57% |
50% |
55% |
|
Sub Prime |
8% |
24% |
13% |
24% |
17% |
Noteworthy
|
Lowest Default Rate by Occupation
|
Lowest Default Rate by State |
|
1) Computer Programmer 0.96% |
1) Minnesota 0.00% |
|
2) Civil Service 1.48% |
2) Ohio 0.65% |
|
3) Analyst 1.63% |
3) New Jersey 0.99% |
|
4) Mechanical Engineer 1.67% |
4) Colorado 1.40% |
|
5) Electrical Engineer 1.85% |
5) New York 1.56% |
|
|
|
Market Commentary by Chris Larsen, Co-Founder and Chief Executive Officer of Prosper
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?
Many might assume that the Prosper marketplace would act less like the mortgage markets and more like the credit card and savings rate markets given that the latter compete with Prosper. Nevertheless, the month over month drop in average borrower rates indicates that the Prosper marketplace may have anticipated the Fed cut.
For example, in September the average borrower rates for all prime and near prime loans funded in the Prosper marketplace were 12.29% and 18.22%, respectively; down 0.37% and 0.28%, respectively, from August.
What is interesting about these percentage drops is how close they are to what was widely anticipated to be a quarter-point instead of a half-point reduction by the Fed. However, what remains to be seen is whether the market will continue to push rates down further in line with the Fed’s surprise move.
Definitions
2007 Year-to-Date: January 1, 2007 through September 30, 2007.
Since Inception: November 1, 2005 through September 30, 2007. 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 invested 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 September 30, 2007. 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. Rates shown are interest rates, not annual percentage rates.
Mix of Funded Borrowers: Prime includes AA and A credit grade loans (credit scores of 720+). Near Prime includes B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime includes E and HR credit grade loans (credit scores below 600).
About Prosper
Prosper (www.prosper.com), America’s largest people-to-people lending marketplace, was created to make consumer lending more financially and socially rewarding for everyone. Prosper’s membership consists of over 440,000 people from across the country. Since launching in February 2006, over $90 million in loans have been funded in the marketplace.The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper’s online auction platform. People who register as Prosper lenders set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. In addition to criteria commonly used by institutional lenders, such as credit scores and histories, Prosper lenders can consider borrowers’ personal stories and group affiliations. Groups on Prosper are instrumental in bringing people together for the common goal of borrowing at better rates. People who want to borrow on Prosper create loan listings for up to $25,000 and set the maximum rate they are willing to pay a lender. Then the auction begins as Prosper lenders bid down the interest rate. Once the auction ends, Prosper takes the bids with the lowest rates and combines them into one simple loan to the borrower. Prosper handles all on-going loan administration tasks including loan repayment and collections on behalf of the matched borrowers and lenders. Prosper was co-founded by Chris Larsen, co-founder of E-LOAN, and John Witchel, technology entrepreneur. Backed by Accel Partners, Benchmark Capital, DAG Ventures, Fidelity Ventures, Meritech Capital, and Omidyar Network, Prosper has raised approximately $40 million. Prosper’s marketplace platform is patent pending.
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