There has been a lot of news recently with regards to interest rates and loan performance on the Lending Club and Prosper platforms. While some may argue that these concerns are unfounded, investors are clearly taking an increased interest with the changes going on and the recent market volatility. In this post, I’ll address interest rate increases and then delve into vintage performance at both Prosper and Lending Club, which is the best gauge of performance.
Below are stories that received a lot of press, leading to additional speculation of poor loan performance:
- Santander recently sold nearly $1 billion of Lending Club loans to JP Morgan.
- Several articles were released stating that the Lending Club models had “misfired”. This report was addressed by Lending Club directly who stated that the chart in question was misinterpreted. The truth is that while some pockets of loans out-perform and some under-perform, general performance is in line with expectations.
- This past week, news broke that Moody’s may downgrade bonds sold by Citigroup which included loans originated by Prosper citing slower repayment and increased charge-offs.
- Today the Financial Times came out with this article discussing possible worrying signals from p2p lending platforms.