With some of the loans that I analyze there aren’t enough matching loans to analyze the interest rates. I have been thinking of ways to increase the pool of loans without changing the match characteristics.
To that end from what I can tell DTI seems to be the least correlated credit statistic to defaults. So I will be changing my loan rate analysis to match loans from the last 100 days with the credit grade + or – $5,000 in amount and a DTI from 0% to the loan DTI plus 10%.
For example, the last loan I reviewed was B Credit $9,000 with a 15% DTI. So my loan rate analyzer will now find loans from the last 100 days with B Credit, $4,000 to $14,000, and 0% to 25% DTI. For this loan 91 loans were found that matched prior to the change. After the change 92 loans were found. This might be a bad example as what I am really trying to do is generate a pool of at least 50 loans. (The Prosper ROI performance tool requires at least ~50 loans in order to produce results.)
This change should result is a slightly less weighted average as high DTI loans have a higher interest rate and this change now includes low DTI loans. I will be changing the online loan rate analyzer in the next couple of days. The Prosper Loan Rate Analyzer has been updated.
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