Prosper Releases Market Survey Results for June 2008
2008-07-15 02:00:00
SAN FRANCISCO (EMWNews) July 15, 2008 —
Prosper, America’s
largest people-to-people lending marketplace, today released results for
June 2008. In this month’s commentary, Prosper
CEO and Co-Founder, Chris Larsen, highlights recent studies related to
returns and bidding behavior in the Prosper marketplace.
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June 2008 Prosper People-to-People Lending Market Survey
Prosper’s 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: [email protected].
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 Prosper’s
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 |
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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 Prosper’s
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 |
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June
2008 |
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June
2007 |
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Year-to-Date
2008 |
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Year-to-Date
2007 |
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Since
Inception |
New Members |
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28,401 |
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30,985 |
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216,036 |
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202,459 |
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754,164 |
Funded Loans ($) |
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$8.3 million |
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$7.0 million |
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$46.8 million |
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$43.4 million |
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$155.8 million |
Funded Loans (Units) |
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1,436 |
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950 |
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7,418 |
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6,197 |
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24,803 |
Average Loan Size |
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$5,755 |
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$7,389 |
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$6,309 |
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$7,004 |
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$6,282 |
Daily Average Number of Borrower Listings |
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2,510 |
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2,385 |
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2,454 |
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2,039 |
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1,729 |
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Mix of Funded Borrowers |
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June
2008 |
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June
2007 |
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Year-to-Date
2008 |
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Year-to-Date
2007 |
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Since
Inception |
Prime |
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43% |
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28% |
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42% |
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29% |
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34% |
Near Prime |
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52% |
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61% |
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53% |
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56% |
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54% |
Sub Prime |
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5% |
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10% |
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5% |
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15% |
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12% |
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Estimated Annual Return on Prosper Select Index |
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June 2008 |
Prosper Select Index |
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7.22% |
Prime Select Index |
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8.04% |
Near Prime Select Index |
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6.38% |
Sub Prime Select Index |
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9.18% |
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Average Borrower Rates on Prosper Select Loans |
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June
2008 |
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May
2008 |
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June
2007 |
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Year-to-Date |
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Year-to-Date
2007 |
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Since |
Prime Select Loans |
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9.38% |
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9.55% |
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10.09% |
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9.78% |
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9.96% |
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9.95% |
Near Prime Select Loans |
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16.53% |
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16.17% |
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17.17% |
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16.09% |
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15.47% |
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16.10% |
Sub Prime Select Loans |
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35% |
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22.37% |
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23.15% |
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27.36% |
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23.29% |
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24.21% |
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Definitions
Since Inception: November 1, 2005
through June 30, 2008. 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.
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. Prosper’s
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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