Lend Academy Network Forum

General Category => General P2P Lending Discussion => Topic started by: SLCPaladin on November 15, 2016, 09:49:19 AM

Title: U.S. Consumers Are Increasingly Defaulting on Loans Made Online
Post by: SLCPaladin on November 15, 2016, 09:49:19 AM
This article appeared in Bloomberg this morning:

http://www.bloomberg.com/news/articles/2016-11-15/consumer-loans-souring-fast-in-some-bonds-tied-to-online-lenders
Title: Re: U.S. Consumers Are Increasingly Defaulting on Loans Made Online
Post by: SLCPaladin on November 15, 2016, 09:50:40 AM
I've been thinking a lot lately about the gradual lowering of returns on my portfolio over the past year or so due to a pick up in delinquencies. I remember listening to a podcast a few months where there was discussion about how the Fed went about setting 2% as their inflation target. The take-away was that there wasn't anything particularly scientific or magic about the 2% number other than the Fed wants to avoid deflation, so a 1% target means variance would occasionally push it negative. 2% gives a good buffer for when the dips occur. If feel like LC and other lenders need to be very judicious with their rates so that if and when delinquencies rise, there will be enough of a buffer to still achieve returns.
Title: Re: U.S. Consumers Are Increasingly Defaulting on Loans Made Online
Post by: rawraw on November 18, 2016, 04:16:44 PM
I've been thinking a lot lately about the gradual lowering of returns on my portfolio over the past year or so due to a pick up in delinquencies. I remember listening to a podcast a few months where there was discussion about how the Fed went about setting 2% as their inflation target. The take-away was that there wasn't anything particularly scientific or magic about the 2% number other than the Fed wants to avoid deflation, so a 1% target means variance would occasionally push it negative. 2% gives a good buffer for when the dips occur. If feel like LC and other lenders need to be very judicious with their rates so that if and when delinquencies rise, there will be enough of a buffer to still achieve returns.
You can't be profitable in all scenarios.  Or you can, but its really hard.  I wouldn't count on it.

+1 for that PLanet Money podcast