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Prosper Interest Rates On the Rise

Prosper interest rates are on the rise — in case you where wondering this is a good thing for lenders! 

The release of the lender bidding guidance (general announcement, secondary analysis) seems to line up with a rise in near prime and sub prime interest rates.  Similarly, the graph that I am using to demonstrate my point is coming from Eric’s Credit Community who is today’s guest blogger on the Prosper Blog: Follow the Leader: Watching Lenders and Groups on ericscc.com.  Coincidence?

Eric’s CC Lender Rate History

Lender Rate History

Educating lenders to their risks seems to have had a dramatic effect.  Kudos Prosper.

I wonder if the borrower listing rate guidance is having a similar effect on starting interest rates?

Here is what I came up with for average listing starting rate since 09/01/2007 (7 Day moving average). This would be better if a 30 day moving average like the above graph from EricsCC, but we don’t have enough data yet…

Average Listing Starting Rate

Here is the sql:

select aday,creditgrade,avg(borrowermaximumrate) from listing inner join alldays on startdate>=(aday-6) and startdate<(aday+1) where aday'9/1/2007' group by aday,creditgrade order by aday,creditgrade 


December 12, 2007 | Filed Under Uncategorized 

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comments

6 Responses to “Prosper Interest Rates On the Rise”

  1. Mike on December 12th, 2007

    I wonder how Chris Larson will connect this to the latest Fed rate cut.

  2. Chrisfs on December 12th, 2007

    Since Prosper raised the interest rate ceiling to 35%, it makes sense that the interest rates would be on the rise. Plenty of HR and E listings were hitting that ceiling. This allows for better differentiation of loans by interest rate (which could be seen as a proxy for risk)

  3. Kevin on December 12th, 2007

    I actually don’t think raising the ceiling has the most effect…

    I the majority of the effect if from informing the lenders of the expected ROI and from informing the borrowers where to start in order to have the best chance of funding…

    However raising the ceiling surely allows for some higher interest rates and may explain why the adjustment has been steeper in the sub prime as opposed to near prime.

  4. Amanda @ Me vs Debt on December 31st, 2007

    I followed up on your comment/suggestion to getting a Prosper loan. I’m actually already a borrower. I got a great deal (especially compared to these number) with a 14.94% rate for a D rating. Luckily people were able to see past my rating to my honesty and potential. However, only 6 months later, its not likely that my rating has increased, so what are the chances of getting a rate under 14%? I’d say its not likely, but I could be wrong.

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