Prosper Releases Market Survey Results for June 2008

2008-07-15 02:00:00

SAN FRANCISCO (EMWNews) July 15, 2008 —

Prosper, Americas

largest people-to-people lending marketplace, today released results for

June 2008. In this months commentary, Prosper

CEO and Co-Founder, Chris Larsen, highlights recent studies related to

returns and bidding behavior in the Prosper marketplace.

The Democratization of Personal Consumer Loans? Determinants of Success in Online Peer-to-Peer Loan Auctions

June 2008 Prosper People-to-People Lending Market Survey

News Image

Prospers People-to-People Lending Market

Survey results are released 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.

Market Commentary By Prosper Co-founder and Chief Executive Officer,

Chris Larsen

In June, two very interesting independent academic studies were

released. The first study

by Economists Ginger Zhe Jin

and Seth Freedman of the University of Maryland looks at Prospers

market since inception to determine average returns and other

interesting conclusions about the market.

Another study

led by Paul

Dholakia at Rice University finds that decisions made by Prosper

lenders are much less likely to be influenced by race or gender and strong

evidence for the democratization of lending practices in P2P loan

auctions. The study also cites that bidders

on Prosper:

[]

seem more rational (bid according to what is best for them

financially) and less influenced by stereotypes (bid according to

old notions and stigmas). This outcome is substantially different

from the documented discriminatory practices of financial

institutions (e.g., Ladd 1998; Munnell et al. 1996; Blanchflower,

Levine, and Zimmerman 2003) [].1

 

 

 

 

 

As we have previously stated, one of our primary objectives in making Prosper

market data fully transparent and freely available via an API is to

allow and encourage anyone to study the Prosper market and consumer

credit markets in general. We deeply appreciate the level of diligence

and analysis so many have contributed using Prospers

marketplace data. We are also very encouraged that an increasing number

of academics, economists and professional credit analysts have taken the

time to conduct deep studies of the market and share their conclusions

publicly.

Membership and Loan Volume Statistics

 

 

 

 

June

2008

 

June

2007

 

Year-to-Date

2008

 

Year-to-Date

2007

 

Since

Inception

New Members

 

28,401

 

30,985

 

216,036

 

202,459

 

754,164

Funded Loans ($)

 

$8.3 million

 

$7.0 million

 

$46.8 million

 

$43.4 million

 

$155.8 million

Funded Loans (Units)

 

1,436

 

950

 

7,418

 

6,197

 

24,803

Average Loan Size

 

$5,755

 

$7,389

 

$6,309

 

$7,004

 

$6,282

Daily Average Number of Borrower Listings

 

2,510

 

2,385

 

2,454

 

2,039

 

1,729

 

 

 

 

Mix of Funded Borrowers

 

 

 

 

June

2008

 

June

2007

 

Year-to-Date

2008

 

Year-to-Date

2007

 

Since

Inception

Prime

 

43%

 

28%

 

42%

 

29%

 

34%

Near Prime

 

52%

 

61%

 

53%

 

56%

 

54%

Sub Prime

 

5%

 

10%

 

5%

 

15%

 

12%

 

 

 

 

Estimated Annual Return on Prosper Select Index

 

 

 

 

June 2008

Prosper Select Index

 

7.22%

Prime Select Index

 

8.04%

Near Prime Select Index

 

6.38%

Sub Prime Select Index

 

9.18%

 

Average Borrower Rates on Prosper Select Loans

 

 

 

 

June

2008

 

May

2008

 

June

2007

 

Year-to-Date
2008

 

Year-to-Date

2007

 

Since
Inception

Prime Select Loans

 

9.38%

 

9.55%

 

10.09%

 

9.78%

 

9.96%

 

9.95%

Near Prime Select Loans

 

16.53%

 

16.17%

 

17.17%

 

16.09%

 

15.47%

 

16.10%

Sub Prime Select Loans

 

35%

 

22.37%

 

23.15%

 

27.36%

 

23.29%

 

24.21%

 

 

 

 

 

Definitions

Since Inception: November 1, 2005

through June 30, 2008. Prospers by

invitation only friends and family

launch began on November 1, 2005 and Prosper launched to the general

public on February 13, 2006.

2008 Year-to-Date: January 1, 2008

through June 30, 2008.

2007 Year-to-Date: January 1, 2007

through June 30, 2007.

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 June 30, 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).

About Prosper

Prosper, America’s largest

people-to-people lending marketplace, was created to make consumer

lending more financially and socially rewarding for everyone. Prospers

membership consists of over 750,000 people from across the country.

Since launching in February 2006, over $159 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 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. 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 data and

histories, Prosper lenders can consider borrowers’ personal stories,

endorsements from friends, and group affiliations. 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.

1 Rick L. Andrews, Utpal (Paul) Dholakia,

Michal Herzenstein, Evgeny Lyandres (2008), The

Democratization of Personal Consumer Loans? Determinants of Success in

Online Peer-to-Peer Loan Auctions, 31

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