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[onthefence]

I think it is worth pointing out that prosper has finally broken their April 2007 record for loans funded this past May.  And did so with a more conservative basket of higher quality loans.
http://www.lendingstats.com/loansFunded

I am sure that finally opening up the borrower market to 36% in almost every state had a lot to do with this.

Well, now they just need to quadruple this number to stay in the black.

[ira01]

I think it is worth pointing out that prosper has finally broken their April 2007 record for loans funded this past May.  And did so with a more conservative basket of higher quality loans.
http://www.lendingstats.com/loansFunded

I am sure that finally opening up the borrower market to 36% in almost every state had a lot to do with this.

There is something inconsistent about these two points. I don't think that listings that required a rate of 36% to get funded are likely to be very "conservative" or "higher quality."  To the contrary, I think that 36% listings just enticed greedy/newbie lenders to bid on crap loans that will default in higher than average numbers.  I guess we'll see in 6 months or so. 

ETA:  I think there are actually two strands of this effect working.  One, I stated above (that being able to offer an even higher interest rate let more crap loans get funded).  But the second strand, which I didn't note before, would be that in those states that had completely unrealistic rate caps (such that few, if any, loans ever funded), being able to offer an "appropriate" rate based on the merits of the listing would also allow more (non-crap) loans to fund.  I have no idea which of these two strands is larger in terms of numbers of loans (or dollars) funded. 

[Urbi_et_Orbi]

I am sure that finally opening up the borrower market to 36% in almost every state had a lot to do with this.

I don't follow...

[Mtnchick]

I am sure that finally opening up the borrower market to 36% in almost every state had a lot to do with this.

I don't follow...

I think Ira stated it well:

I think that 36% listings just enticed greedy/newbie lenders to bid on crap loans that will default in higher than average numbers.

[Risk_Reward]

You need to understand auctions.  I start all my ebay auctions at $1 or $.01.  These auctions end at the best prices, because they draw the most interested parties.  The same will happen for Prosper.  Always start your loan high and watch it go low. 

[ira01]

You need to understand auctions.  I start all my ebay auctions at $1 or $.01.  These auctions end at the best prices, because they draw the most interested parties.  The same will happen for Prosper.  Always start your loan high and watch it go low. 

This is only true on Prosper within certain bounds.  Listings that start too high given the credit details and loan size tend not to do well -- and for good reason.  A borrower who doesn't intend to repay the loan doesn't care about the final rate.  Or a borrower whose financial condition is very precarious (perhaps in ways not shown by the numbers in the listing) also may not care much about the rate, due to desparation. 

[Risk_Reward]

You need to understand auctions.  I start all my ebay auctions at $1 or $.01.  These auctions end at the best prices, because they draw the most interested parties.  The same will happen for Prosper.  Always start your loan high and watch it go low. 

This is only true on Prosper within certain bounds.  Listings that start too high given the credit details and loan size tend not to do well -- and for good reason.  A borrower who doesn't intend to repay the loan doesn't care about the final rate.  Or a borrower whose financial condition is very precarious (perhaps in ways not shown by the numbers in the listing) also may not care much about the rate, due to desparation. 

Any evidence of this?

[cubbiesnextyr]

You need to understand auctions.  I start all my ebay auctions at $1 or $.01.  These auctions end at the best prices, because they draw the most interested parties.  The same will happen for Prosper.  Always start your loan high and watch it go low. 

This is only true on Prosper within certain bounds.  Listings that start too high given the credit details and loan size tend not to do well -- and for good reason.  A borrower who doesn't intend to repay the loan doesn't care about the final rate.  Or a borrower whose financial condition is very precarious (perhaps in ways not shown by the numbers in the listing) also may not care much about the rate, due to desparation. 

Any evidence of this?

I recall someone doing studies about this a while back.  Basically the conclusion was that if someone accepts a loan with a rate well above the going rate for their credit grade, they tended to default (at least go late) at a much higher rate.

The starting rate of the auction wasn't a factor, but the final rate was.

[onthefence]

*sigh*  It looks like things are back down for this June.
http://www.lendingstats.com/loansFunded

[cubbiesnextyr]

*sigh*  It looks like things are back down for this June.
http://www.lendingstats.com/loansFunded

Still a year-over-year increase though.

[warhola]

*sigh*  It looks like things are back down for this June.
http://www.lendingstats.com/loansFunded

But no lates yet 

[Capital_Finance_Group]

*sigh*  It looks like things are back down for this June.
http://www.lendingstats.com/loansFunded

But no lates yet 

The operative word is "yet"

[Urbi_et_Orbi]

The first May loans are already showing signs of trouble.

[jmathree]

The first May loans are already showing signs of trouble.

Late May Loans in Every Credit Grade Already

[d94e59b6]

You need to understand auctions.  I start all my ebay auctions at $1 or $.01.  These auctions end at the best prices, because they draw the most interested parties.  The same will happen for Prosper.  Always start your loan high and watch it go low. 

As someone who would repay every time, if I was going to request a loan, I would not waste my time starting out at 36%--ebay strategy notwithstanding.  To insinuate that I am such a poor businesswoman that I would either take that rate or pull the listing when I don't get the rate I want is unacceptable.  However, as has already been stated, if I were in trouble and had no intention of paying, I would not care about the rate.  This is a poor idea and these loans will fare badly.