Prosper just released it monthly survey and it included commentary from CEO Chris Larsen. What do you think, is this the “greatest economic crises America has ever faced”? (For my part there is no doubt it is in my lifetime, but I don’t see this getting to the level of the Great Depression…)
Here is what the CEO said:
In the midst of one of the greatest economic crises America has ever faced, and on the heels of last week’s Federal Reserve report indicating that for the first time in over a decade consumer borrowing significantly contracted, people are naturally asking what role Prosper will play and what trends we are seeing.
Although it’s a bit too soon to point to Prosper data that correlates directly with the financial meltdown that has only begun to unfold, there are some noteworthy trends that have accelerated since the credit crunch began 14 months ago that are relevant to the current environment.
The biggest trend that continues in the Prosper marketplace since the credit crunch began last summer is that the percentage of borrowers with sterling credit that are listing and getting funded on Prosper remains at record levels (See “Mix of Funded Borrowers” Table). We expect this trend to continue particularly as more lenders on Prosper have become more conservative in their bidding strategies; and as more people, even those with the very best credit, are having their credit card limits reduced and home equity lines cancelled, and are being turned down for auto loans and private education loans.
Another key trend we’re experiencing is that as consumer borrowing from traditional financing sources is shrinking, Prosper is experiencing solid growth. Year-to-date, the number of loans in terms of units is up 24% over the same time period last year, and up 37% in September 2008 compared to September 2007. At the same time, loan originations year-to-date in terms of dollars have increased 8% over the same period last year, and are up 7% in September 2008 compared to September 2007.
At a time when every sector in the economy seems to be under pressure and shrinking, the growth Prosper has experienced is very respectable. However, some may wonder why there is a disparity between unit growth and loan dollar volume growth. The answer lies in the average loan amount being funded on Prosper. Year-to-date the average loan amount is $6,047, down 13% or $925 compared to the same period last year. In September 2008 the average loan amount was $5,544, down 23% or $1,631 from September 2007. This indicates that lenders on Prosper are being more cautious by directing their bids toward listings with lower requested loan amounts.
All of these trends on Prosper are significant and interesting, but far more important in this time of economic upheaval is the opportunity for Americans to revitalize the spirit of It’s A Wonderful Life; to channel the essence of Bedford Falls and George Bailey; and to “do well by doing good.”
September 2008 Prosper People-to-People Lending Market Survey
|
Membership and Loan Volume Statistics |
||||||||||
| September
2008 |
September
2007 |
Year-to-Date
2008 |
Year-to-Date
2007 |
Since
Inception |
||||||
| New Members | 21,338 | 28,683 | 280,621 | 299,549 | 818,749 | |||||
| Funded Loans ($) | $5.8 million | $5.4 million | $66.7 million | $61.8 million | $175.7 million | |||||
| Funded Loans (Units) | 1,038 | 758 | 11,024 | 8,868 | 28,409 | |||||
| Average Loan Size | $5,544 | $7,175 | $6,047 | $6,972 | $6,184 | |||||
| Daily Average Number of Borrower Listings | 2,189 | 2,300 | 2,372 | 2,214 | 1,771 | |||||
|
Mix of Funded Borrowers |
||||||||||||||
| September
2008 |
September
2007 |
September
2006 |
Year-to-Date
2008 |
Year-to-Date
2007 |
Year-to-Date
2006 |
Since
Inception |
||||||||
| Prime | 45% | 30% | 21% | 43% | 29% | 26% | 35% | |||||||
| Near Prime | 50% | 62% | 55% | 52% | 58% | 50% | 54% | |||||||
| Sub Prime | 5% | 8% | 24% | 5% | 13% | 24% | 11% | |||||||
Purpose of Personal Loan Listings and Fundings
Borrowers who post listings in the Prosper marketplace are asked how they intend to use their personal loan. The following reflects borrowers’ statements of intended use of loan proceeds with regard to both listings and loans. Prosper does not verify or confirm after funding how loan proceeds are used.
|
September 2008 |
September 2008 |
|||
| Personal Loan for Debt Consolidation | 55% | 47% | ||
| Personal Loan for Business Use | 21% | 20% | ||
| Personal Loan for Home Improvement | 5% | 10% | ||
| Personal Loan for Education | 4% | 4% | ||
| Personal Loan for Auto / Vehicle | 3% | 3% | ||
| Personal Loan for Other Use | 12% | 16% | ||
|
Estimated Annual Return on Prosper Select Index |
||
| September 2008 | ||
| Prosper Select Index | 6.58% | |
| Prime Select Index | 7.66% | |
| Near Prime Select Index | 5.52% | |
| Sub Prime Select Index | 7.69% | |
|
Average Borrower Rates on Prosper Select Loans |
||||||||||||
| September
2008 |
August
2008 |
September
2007 |
Year-to-Date 2008 | Year-to-Date
2007 |
Since Inception | |||||||
| Prime Select Loans | 11.13% | 10.00% | 9.98% | 9.97% | 10.03% | 10.02% | ||||||
| Near Prime Select Loans | 17.7% | 18.07% | 15.79% | 16.44% | 15.93% | 16.29% | ||||||
| Sub Prime Select Loans | n/a | n/a | 24.86% | 26.03% | 23.27% | 24.11% | ||||||
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