Author Topic: Loan volume and changes in the % of loans that are offered first as whole notes  (Read 4533 times)

faeriering

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So I've noticed that there are loads more loans available >2000 today when I checked. I've also noticed that fewer of them are meeting my filter criteria.

I know that when LC first started releasing loans as whole notes to institutional investors it was something like 20% of the loans on the market.  I vaguely remember reading somewhere that that number has continued to go up over the last several months.  Has anyone done analysis to see if there is a quality difference in the loans being offered to institutional investors first as whole notes vs. those being offered to "the rest of us"?  I was just curious if the "good" notes, those likely to perform better than others in their interest rate block, were more likely to be offered to institutional investors first and if that was why so many more notes were staying longer on the platform. I'm not sure if my question makes sense, but it seems like there's a lot of notes that might be considered lower preforming that are staying on the platform longer.

Randawl

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That's interesting because that exact question came to my mind again today. 
Also, looking at the bolus of new loans to hit the platform made me wonder if any of their approval criteria could have changed or if it's just due to the post-holiday consolidation rush.  It's most likely the latter in my opinion.

I believe I read somewhere in the past that it's supposedly random in the initial whole/fractional assignment.  I'd love to see some data but it will take some time for notes in both categories to season in order for any conclusions to begin to be drawn regarding the possibility of higher quality loans being preferentially designated. 

To me, it seems against Lending Club's best interest to engage in such an endeavor.  I doubt they'd risk losing retail investor confidence to such a degree over something like that, but we'll see!

Zach

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Your post sparked my curiosity to investigate. The data points to the fact that the assignment is random relative to actual loans picked. The only correlation that I see (as expected) is that the percentage of loans issued in each credit grade is among the same percentage of total loans for whole and fractional loans.

For example, of all the fractional and whole loans issued in a particular month, about 9% of all loans issued for both fractional and whole loans are of B3 credit grade.

Performance wise, I didn't see any significant differences on Interest Radar on IR01 and 04 scores.

In terms of increasing percentage of loans on the platform that are whole loans, you are correct...
It seems that the percentage of whole loans has been gradually increasing from about 23% to a max of 33% in certain weeks. This may likely be due to increased demand from institutional investors for more loans or....?

viking

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Using my IR strategies, I used to find about 10 loans every day that met my criteria.  However, that number has been decreasing in the last week and today I only found 1 loan  :( !
I wonder if this may be due to the change in underwriting criteria?

supergeek62

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I've noticed the same thing - many more notes available, but far fewer that meet the criteria I've set up.  To me, it seems like there are a lot more loans for small business purposes and less for debt consolidation, but that's just my gut feeling - I don't have any hard numbers to compare.

mo

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There was a period around Christmas when the number of notes being offered where the borrower had a public record shot up over the period of a week.  It turned out that LC had been running an advertising campaign that happened to target people who had public records.  If you are seeing a surge in loans of a certain character it is probably because of similar promotion to a targeted group predisposed to those characteristics.

rawraw

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Guys, they changed the underwriting criteria.  I'm sure they wanted to keep up with explosive growth, so they are letting more people on.

faeriering

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@zpbsfg, thanks for validating that at least LC is still pulling randomly from the existing loan market to offer loans to the whole note investors.