Peer to Peer Loan Index – July 2013

Current APR Rate Averages

Provider APR +/- w/w
LendingClub 12.67% 0.27%
Prosper 16.85% 0.40%
peer to peer loan rates

Lending Club rates continue to stay below Prosper in July.  In August, Prosper will change the credit score method they use to evaluate potential borrowers. They will be moving to FICO, which is what Lending Club uses. It will be interesting to see if this impacts the difference in APR between the the two platforms.

Average loan size at Lending Club was $14,192, while Prosper’s average loan size was $10,332.

This chart compares average APRs from a pool of loans on Prosper and Lending Club. The loan pool includes all borrowers with 36-month term lengths and credit scores in the top 20% of the range.

Peer to Peer Loan Rate Index – June 2013

 

Provider APR +/- w/w
LendingClub 12.73% 0.08%
Prosper 14.46% 2.82%

In our first index of 2013, Prosper and Lending Club APRs have come much closer together. Lending Club rates still generally fall somewhat lower than that of Prosper for a similar borrowing group. However, the latest margin of difference between them is only 1.73% . This compares to last year’s differentials, which were just over 2% difference on the low end, and over 10% difference on the high end. Prosper’s lending volume still pales in comparison to Lending Club, but the more competitive rates bode well for Prosper in their attempt to win over more borrowers.

 

This chart compares average APRs from a pool of loans on Prosper and Lending Club. The loan pool includes all borrowers with 36-month term lengths, debt-to-income ratios of 10-20%, and credit scores in the top 20% of the range.

Peer Lending Rate Index: October 27th, 2012

Current APR Rate Averages

Provider APR +/- w/w
LendingClub 11.20% 0.71%
Prosper 13.83% 11.76%
Peer to peer loan rates

Peer to peer lending providers Prosper Marketplace and Lending Club closed out October with borrowing rates at only 2.63% apart, the closest margin since July. Lending Club saw a slight uptick in its average APR to 11.2%, while Prosper showed a significant drop. Rates on Prosper loans have been consistently higher than Lending Club. In general, APRs on Prosper loans are likely to fluctuate more because of its far smaller loan pool size. Lending Club typically lends over 3-5 times as many loans per month as Prosper.
Lending Club issued 6,263 loans in October for $82 million, while Prosper issued 1,823 loans for $15.3 million.

The Peer Lending Rate Index compares average APRs from a pool of loans on Prosper and Lending Club. The loan pool includes all borrowers with 36-month term lengths, debt-to-income ratios of 10-20%, and credit scores in the top 20% of the range.

Apply for a loan at LendingClub.

Apply for a loan at Prosper.

Peer to Peer Loan Index – October 16th, 2012

Current  APR Rate Averages

Provider APR +/- w/w
LendingClub 10.49% 0.17%
Prosper 25.59% 1.59%
peer-to-peer loan rate comparison

Borrowing rates on Prosper Marketplace continue to float well above that of its main competitor, Lending Club in this week’s Peer to Peer Loan Index. Prosper APRs averaged 15 percentage points above Lending Club in the second week of October– a consistent trend of the past four weeks that is dramatically higher than the trend from earlier this summer, when average spreads hovered around 6% for the three months prior to September.

The Peer to Peer Loan Index compares borrowers of a similar type – similar credit score and debt-to-income ratios. Yet, week after week, the Index shows that borrowers of similar DTIs and credit scores are better off borrowing from Lending Club.

It is not clear whether this large differential is a cause or a result Prosper’s weak loan volume growth rate this summer. As of October 16th, Prosper is on track to issue the fewest loans since April (1,562). It grew by only 33 loans in September, which followed a month over month decline in August. Compare that to Lending Club which increased loan volume by nearly 600 loans in September, and has been continuing a torrid rate of growth – projected to grow by 12% month over month in October.

The Peer to Peer Loan Index compares average APRs from a pool of loans on Prosper and Lending Club. The loan pool includes all borrowers with 36-month term lengths, debt-to-income ratios of 10-20%, and credit scores in the top 20% of the range.

Apply for a loan at LendingClub.

Apply for a loan at Prosper.

Growth of Peer-to-Peer Lending Creates Room for More Kinds of Borrowers

With the exponential growth of peer to peer lending over the past two years, platforms like Lending Club have shown increasing flexibility in the kind of borrower they accept on their sites. Growing investor demand has pushed the platforms – particularly Lending Club – into accepting higher-risk (though still above average) borrowers to meet investor’s thirst for new peer to peer loans.

Lending Club sets fairly strict approval criteria for their borrowers, which must have at least a 660 FICO score. But over the past two years, approval rates on Lending Club have risen dramatically. In September 2012, the approval rate on Lending Club stood at 16% versus 9.5 % in 2010 – a 70% increase. That means people still wading in debt have a better chance to get a loan and consolidate.

 

The loosening borrower restrictions represent an opportunity for borrowers that are still trying to crawl themselves out of debt. Lending Club’s average borrower debt to income ratio– which excludes a borrower’s mortgage – rose from 12.95% in September 2010 to 17.3% in September 2012. That’s an increase of 34% in just two years. This bucks the country’s overall deleveraging trend since the recession, and shows clearly how Lending Club is taking in a broader type of applicant.

 

The growing investor pool appears to be a major driver. Institutions seeking higher returns on fixed-income assets have entered the market more aggressively in the past two years. Lending Club now has more than $100 million in institutional money in peer to peer loans. . As a result, average interest rates have climbed as well, though not as quickly – rising 17% over the past two years.

 

The increased borrower approval may reflect Lending Club’s acknowledgement that, as with credit card companies, the industry and the economy has reached more solid footing, creating the possibility for peer to peer loans to become more widely available to the average consumer.

 

Peer Lending Pulse – Sept. 15th, 2012

Current  APR Rate Averages

Provider APR +/- w/w
LendingClub 10.49% 0.35%
Prosper 13.90% 0.35%
Peer to peer rate comparison

 

Peer to peer loan rates remain almost flat week over week for both Prosper and Lending Club. APRs on Lending Club 3-year loans remain approximately 3 percentage points less expensive than similar Prosper loans. Since The Loan Sheet began tracking peer to peer lending rates in May, rates have remained fairly consistent across borrower’s debt to income ratio and credit score. But while APRs have remained consistent, other factors, like borrower risk profiles, have begun to change.

In the next post, we’ll discuss how borrower risk profiles have changed across providers in recent months and what this could mean for borrowers and lenders going forward.

The Loan Sheet’s Peer Lending Rate Compare measures average APRs from a pool of loans on Prosper and Lending Club. The loan pool includes all borrowers with 36-month term lengths, debt-to-income ratios of 10-20%, and credit scores in the top 20% of their respective ranges.

Peer Lending Rate Pulse – Sept. 3rd, 2012

Current  APR Rate Averages

Provider APR +/- w/w
LendingClub 8.29% 0.07%
Prosper 13.71% 6.55%
 

 

Peer-to-peer lending providers Prosper Marketplace and Lending Club closed out August with their lowest borrowing rates in several weeks. APRs on Prosper dropped by a significant 5.55% in one week to 13.71%, while Lending Club rates dropped over the past two weeks to their lowest levels since The Loan Sheet began tracking APRs in May.

The late month swoon caps a month when Lending Club issued a record $70 million in loans – a 17% month over month increase – and three times the volume of a year ago. Meanwhile, Prosper’s loan volume shrank by $600K this month to $14.3 million, marking its first month-over-month volume decline in over two years.  The two providers seem to be moving in opposite directions in terms of loan volume.

Lending Club continues to surge ahead of Prosper in terms of market share. It now garners 82% of the U.S. peer to peer loan market – up from 77% a year ago.  One factor in the growing disparity could be the difference in borrowing costs. Lending Club APRs are currently trending at about 5% below that of Prosper.

The Loan Sheet’s Peer Lending Rate Pulse compares average APRs from a pool of loans on Prosper and Lending Club. The loan pool includes all borrowers with 36-month term lengths, debt-to-income ratios of 10-20%, and credit scores in the top 20% of the range.

Peer Lending Rate Compare: August 21st, 2012

Provider APR +/- w/w
LendingClub 10.54% 0.05%
Prosper 20.49% 2.66%
peer to peer lending rate compare

 

Borrowing rates between Lending Club and Prosper widened this week as Prosper APRs increased to over 17%, while Lending Club continued to remain steady at around 10%. The most significant development this month is the growth in loan volume for Lending Club – trending at almost 50% month-over-month, while Prosper now trends down – its first month-over-month decline in over 2 years. Month-to-date through August 18th, Prosper issued 732 loans for $4,207,892, while Lending Club issued 4,223 loans for $53,592,175. Lending Club’s loan volume is now almost 13 times greater than Prosper, the largest difference between them yet.

How much is the rate discrepancy impacting Prosper’s ability to keep up with Lending Club? It can’t be helping.

The Loan Sheet’s Peer Lending Rate Compare shows average APRs from a pool of loans on Prosper and Lending Club. The loan pool consists of borrowers with 36-month term lengths, debt-to-income ratios of 10-20%, and credit scores in the top 20% of the range.

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