Lend Academy Network Forum

Lending Club Discussion => Investors - LC => Topic started by: Fred93 on November 09, 2018, 02:22:49 AM

Title: LC increases interest rates 11/8/2018
Post by: Fred93 on November 09, 2018, 02:22:49 AM
This time the increases are only in A and B grade loans.  Correct direction, but change is too small.

Each line is one grade.  The dots on the bottom line mark the dates that interest rates were changed by LC.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2FLC-interest-vs-time-2018-11-08.png&hash=9ead3ee49f020e0967c03e4f7de9793c)
Title: Re: LC increases interest rates 11/8/2018
Post by: SLCPaladin on November 09, 2018, 12:44:42 PM
Too small indeed. I just saw that the highest yielding NCUA CD is at 4% for a 5-year term.
Title: Re: LC increases interest rates 11/8/2018
Post by: Reginald on November 10, 2018, 11:25:52 AM
Really, what does a quarter point increase really matter with LC's skyrocketing chargeoff rates?   The bottom line is what is the total return. These are not secured loans we are talking about here.

Investors,

Take a look at your last month's statement (found by clicking on your account name, open the PDF for the month or summary for the year), On the first page of the summary, on the right-hand side, look at the EARNINGS SUMMARY. Is your total what you expected?

On the LC statistics page,  https://www.lendingclub.com/info/demand-and-credit-profile.action , look at the interactive table entitled LOAN PERFORMANCE DETAIL. In it you can see that the Adjusted Net Average Return has never been that great. There are some serious effects of chargeoff's going on there.
 

Every vintage of loans coming from LC since 2012 is worse than the year before. See the interactive diagram entitled "NET ANNUALIZED RETURN BY VINTAGE " at: https://www.lendingclub.com/info/demand-and-credit-profile.action

My point is that this interest rate increase is not enough to sustain the investments given the change in the rate of chargeoffs (which are creeping upward). In addition more stable and tax favored investments such as 3 -5 year municipal bonds, Insured CD's and Treasuries make LC loans a bad investment -despite the meager 25 basis points.