Prime Borrowing on Prosper Hits Record Levels — Febuary Marketplace Survey | P2P Lending, Peer to Peer Lending, People to People Lending

SAN FRANCISCO–(BUSINESS WIRE)–March 11, 2008–Spurred by the credit crunch, attractive rates, and lender demand for conservative assets, Prosper (www.prosper.com), America’s largest people-to-people lending marketplace with over 600,000 members and $120 million in funded loans, reported that the number of prime borrowers (720+ credit scores) creating listings and obtaining loans continues to hit record levels.

February 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: p2plendingmarketsurvey@prosper.com.

Market Commentary By Prosper Co-founder and Chief Executive Officer, Chris Larsen

In February 2008, the percentage of prime loans funded on Prosper once again hit record levels, accounting for 43% of originations. At the same time, the percentage of prime listings on Prosper hit an all time high of just over 18% — a big jump from 9% in February 2007 and the previous high of 12% in December 2007 — while the percentage of sub prime listings hit an all time low of 33% and accounted for a mere 6% of funded loans.

Some other key metrics we watch closely include the type of listings that are created and funded in the Prosper marketplace. Very broadly, we look at listings that, based on historical Prosper loan performance data, can be made at an attractive risk-return tradeoff and those that can only be made at an unattractive risk-return
tradeoff. By providing more robust information to lenders on the expected returns of listings, we have seen an increase in originations from attractive risk-return listings of over 200% and a decrease in originations from unattractive risk-return listings of 80% over the course of the last year.

As we discussed at our Prosper Days community conference, these dramatic and constructive shifts in the marketplace have been driven by three key factors: the pervasive credit crunch and sub prime mortgage meltdown; recently introduced performance data-driven tools and features; and, increasing mainstream acceptance of Prosper as an attractive funding source and asset class.

Mix of Funded Borrowers

———————————————————————-
February February Year-to-Date Year-to-Date Since
2008 2007 2008 2007 Inception
———————————————————————-
Prime 43% 25% 41% 24% 31%
———————————————————————-
Near Prime 51% 57% 53% 55% 55%
———————————————————————-
Sub Prime 6% 18% 6% 21% 14%
———————————————————————-

Membership and Loan Volume Statistics

———————————————————————-
February February Year-to-Date Year-to-Date Since
2008 2007 2008 2007 Inception
———————————————————————-
New Members 30,373 45,092 67,494 64,767 605,622
———————————————————————-
Funded Loans $6.0 $5.6 $13.1 $11.8 $122.2
million million million million million
———————————————————————-
Average Loan
Size $6,591 $6,165 $6,730 $6,158 $6,317
———————————————————————-
Daily Average
Number of
Borrower
Listings 1,898 2,062 2,151 1,806 1,604
———————————————————————-

Estimated Annual Return on Prosper Select Index

———————————————————-
February 2008
———————————————————-
Prosper Select Index 8.00%
———————————————————-
Prime Select Index 8.63%
———————————————————-
Near Prime Select Index 7.54%
———————————————————-
Sub Prime Select Index 5.75%
———————————————————-

Average Borrower Rates on Prosper Select Loans

———————————————————————-
February January February Year-to-Date Year-to-Date Since
2008 2008 2007 2008 2007 Inception
———————————————————————-
Prime
Select
Loans 10.32% 9.91% 9.23% 10.10% 9.10% 10.08%
———————————————————————-
Near
Prime
Select
Loans 17.10% 16.80% 14.44% 16.92% 14.51% 16.24%
———————————————————————-
Sub
Prime
Select
Loans N/A 28.39% 20.87% 28.39% 21.31% 24.07%
———————————————————————-

Definitions

Since Inception: November 1, 2005 through February 29, 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 February 29, 2008.

2007 Year-to-Date: January 1, 2007 through February 28, 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 February 29,
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). N/A: = Not available; no loans met these criteria.

About Prosper

Prosper (www.prosper.com), 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 600,000 people from across the country. Since launching in February 2006, over $120 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 scores 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.

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