Author Topic: LC new interest rates as of 5/4/2017 (only slight changes)  (Read 2695 times)

Fred93

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« Last Edit: May 04, 2017, 06:46:51 PM by Fred93 »

nonattender

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Re: LC new interest rates as of 5/4/2017 (only slight changes)
« Reply #1 on: May 04, 2017, 08:47:36 PM »
Satisfi(c)ed?
A little nonsense now and then is relished by the wisest men.

lascott

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Re: LC new interest rates as of 5/4/2017 (only slight changes)
« Reply #2 on: May 04, 2017, 08:50:04 PM »
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

Fred93

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Re: LC new interest rates as of 5/4/2017 (only slight changes)
« Reply #3 on: May 05, 2017, 01:05:35 AM »
lascott .. thank you for keeping that record.  Its good to be able to see the history so I can understand how rates have changed over time.  Your use of color in the spreadsheet is especially helpful.

Oh and by the way... The huge change at B3 is shocking.  At the low interest rate end I expected only small changes.  I had missed that in my earlier spot check. 

« Last Edit: May 05, 2017, 01:49:15 AM by Fred93 »

lascott

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Re: LC new interest rates as of 5/4/2017 (only slight changes)
« Reply #4 on: May 05, 2017, 11:25:38 AM »
lascott .. thank you for keeping that record.  Its good to be able to see the history so I can understand how rates have changed over time.  Your use of color in the spreadsheet is especially helpful.
Oh and by the way... The huge change at B3 is shocking.  At the low interest rate end I expected only small changes.  I had missed that in my earlier spot check.

You are most welcome. It is pretty easy to maintain.  Everyone certainly appreciates the time you spend posting and analyzing.

Look at B3, B4, and B5 'as of 2016 10/14'  The spread between them seemed odd. I think someone screwed up before and they are now fixing it.  11.39, 11.44, 11.49


 
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

Fred93

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Re: LC new interest rates as of 5/4/2017 (only slight changes)
« Reply #5 on: May 06, 2017, 02:56:14 AM »
Ok, here's my interest rate visualization.



The horizontal axis is linear time, so you can see how the updates have been spaced out over time.  The years are marked off, because we commonly think about what happened in 2015 or 2016 etc.  Each line represents one subgrade.  I've made all the "1" subgrades red, all the "2" subgrades blue, and so forth.  The dots on the bottom red line show the dates of the changes.  The lines in between updates are diagonal, but of course the interest rates actually stayed constant until the date of the next change, at which time they jumped.

Obvously the changes are not evenly spaced in time.  There appears to be no policy about when to change rates.  Late 2015 and early 2016 saw a rapid burst of changes.  At first I thought "oh, that's when they noticed there was a problem", but that's not quite right.  Look closely at those changes in late 2015.  They're small little wiggles.  In retrospect I have no idea why they started these rapid changes.  In 2016 it is obvious that they realized there was a problem. 

As lascott mentioned, the thing that happened to B grades at Oct 2016 change is nutty.  Almost looks like a mistake that they corrected in the most recent change. 

Other than that change, and the little shift up in E4, the tail end of 2016 and the first part of 2017 have essentially no changes.  This would seem to imply that the LC number crunchers think they're doin' ok.  At the present time, investors are not reaching the same conclusion.  LC doesn't share the data that drives them to these changes, so we're left scratchin' our heads.  Will take a few quarters to see whether they got it right.

Rob L

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Re: LC new interest rates as of 5/4/2017 (only slight changes)
« Reply #6 on: May 06, 2017, 11:33:12 AM »
The new interest rates by subgrade is at:
https://www.sec.gov/Archives/edgar/data/1409970/000140997017000545/form8-kfiledon5417interest.htm

For A and B subgrades the expected default rates from yesterday's 10am loan release are:
Subgrade    Interest Rate   Expected Default Rate
     A1                 5.32%                 2.06%
     A2                 7.07%                 2.06%
     A3                 7.21%                 2.06%
     A4                 7.35%                 2.06%
     A5                 7.97%                 2.06%

     B1                 9.44%                 3.99%
     B2                 9.93%                 3.99%
     B3               10.42%                 3.99%
     B4               10.91%                 3.99%
     B5               11.99%                 3.99%

Same expected default rate for all subgrades within A and B grades?? It was not this way before the recent changes.
Seems LC has taken away our visibility into their model assessed A & B subgrade risk.
It is still visible at the C grade and above.

               

nonattender

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Re: LC new interest rates as of 5/4/2017 (only slight changes)
« Reply #7 on: May 08, 2017, 11:18:54 AM »
If ERD held constant across subgrades, someone had a eureka-moment such as this:

"Why don't we mix the dough in such a way that the resulting bread will have a diagonal slope --- and then cut the loaf length-wise?"
A little nonsense now and then is relished by the wisest men.