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[Mark12547]

Business Wire just ran a story: Interest Rates Cut on Prosper P2P Loans

Snippet:

Starting today, interest rates on new loans for Prosper borrowers with better Prosper Ratings will be significantly lower. For example, a borrower with an “AA” Prosper Rating could get a one-year loan with an interest rate as low as 4.99% (a 5.9% APR*), down from a previous interest rate of 6.65%.

[Greebo]

Desperation move?

[AiriusTorpora]

Desperation and a lack of AA/A borrowers. Card companies are offering 0% for 12 months no transfer fees again for people in that class. Why would you take a prosper loan?

[Xenon481]

And now Prosper passes the cost of their desperation on to the lenders.

[TotoMMB]

Desperation move?

+1,000. The platform changed less than a month ago. And they're already tinkering with it? Maybe they figure the lending/funding demand won't change, but lower rates will bring in more listings. I highly doubt it'll provide much of a boost.

[Urbi_et_Orbi]

So, is Prosper's "Interest Rate Board" primarily interested in trying to find the right price/risk ratio to make Prosper a sustainable place for lenders - or is it more about trying to attract borrowers in their own dark hour of need?

[Greebo]

Surprised this hasn't happened yet:  Lobby nomination

[pioneer11]

It is still offering me the higher rate.

[Xenon481]

Surprised this hasn't happened yet:  Lobby nomination

+1 for Lobby.

[onthefence]

There is no surprise that they want to toss out a huge loss leader to attract borrowers.

http://www.prosper.com/help/borrowing.aspx#interestRates

Prosper Rating   Term (yrs)   # Previous Prosper Loans   Borrower Rate   Borrower APR**
AA   1   1+   4.99%   5.93%
AA   3   1+   5.99%   6.33%
AA   5   1+   8.99%   9.20%
            
AA   1   0   4.99%   5.93%
AA   3   0   6.55%   6.89%
AA   5   0   9.55%   9.77%
            
A    1   1+   7.49%   13.25%
A   3   1+   8.49%   10.58%
A   5   1+   11.49%   12.83%
            
A   1   0   8.55%   14.33%
A   3   0   9.55%   11.65%
A   5   0   12.55%   13.91%
         
B    1   1+   11.49%   17.31%
B    3   1+   12.99%   15.13%
B    5   1+   15.99%   17.39%
         
B    1   0   12.99%   18.83%
B    3   0   14.49%   16.65%
B    5   0   17.49%   18.91%
            
C    3   1+   17.99%   21.34%
C    3   0   19.99%   23.38%
            
D    3   1+   24.99%   28.49%
D    3   0   26.99%   30.53%
E    3   -   31.99%   35.64%
            
HR*   n/a   n/a   n/a    n/a

I think borrowers won't be very impressed once they find out that a "Prosper AA" don't match a real world AA.

[kenL]

Desperation move?

+1,000. The platform changed less than a month ago. And they're already tinkering with it? Maybe they figure the lending/funding demand won't change, but lower rates will bring in more listings. I highly doubt it'll provide much of a boost.

I think it's just the natural course of things. LendingClub has also lowered rates several times over the last year. In my opinion, the rates were pretty high and a lot of lenders were making a killing. Now there are a lot of lenders and not enough loans.

[TotoMMB]

There is no surprise that they want to toss out a huge loss leader to attract borrowers.

(...)

I think borrowers won't be very impressed once they find out that a "Prosper AA" don't match a real world AA.

As a borrower, would it be worth it to take out a small loan, and repay it within a month or two? Then listing for another? It wouldn't affect AA's, but any other grade, you're saving 150 to 200 basis points from being a repeat borrower. Especially if you're hitting a large loan ($15K+) and/or going for a 5-year note...

[cowdog]

There is no surprise that they want to toss out a huge loss leader to attract borrowers.

(...)

I think borrowers won't be very impressed once they find out that a "Prosper AA" don't match a real world AA.

As a borrower, would it be worth it to take out a small loan, and repay it within a month or two? Then listing for another? It wouldn't affect AA's, but any other grade, you're saving 150 to 200 basis points from being a repeat borrower. Especially if you're hitting a large loan ($15K+) and/or going for a 5-year note...

Just having Prosper.com on CR is like having bottom feeder credit cards... dare to say no.

 

[Senator]

... a lot of lenders were making a killing.

How do you know this? 

ericscc says lenders aren't compensated for the risk they take.

http://www.ericscc.com/stats/lender-return-distribution

[kenL]

... a lot of lenders were making a killing.

How do you know this? 

ericscc says lenders aren't compensated for the risk they take.

http://www.ericscc.com/stats/lender-return-distribution

I'm just talking about current lenders. Everybody knows that 1.0 lenders lost a shitload, we're not talking about them. But current lenders are doing very well. Reflective-rupee, Aberdeen (post relaunch), cashflow13, laxa, Jguide, lendstats_com are all making a pretty hefty return and there are plenty of others. The only post relaunch lender to lose a lot is im-sharky.

btw, I get this data from my own calculations.