Author Topic: Prosper Returns Dropping?  (Read 4481 times)

dontvote

  • Full Member
  • ***
  • Posts: 226
    • View Profile
    • Email
Prosper Returns Dropping?
« on: December 27, 2013, 05:50:22 PM »
Does anyone know if the seasoned aggregate return has been going down at Prosper? I remember it used to be 9.29%, then 9.09%. Now when I log out I see returns are 8.89%.



[attachment deleted by admin]
dontvote

Interest Radar IRR: 46.11%
NSR ROI: 41.22%
Average Loan Age: Your Moms

Peter

  • Administrator
  • Hero Member
  • *****
  • Posts: 755
    • View Profile
    • Lend Academy
    • Email
Re: Prosper Returns Dropping?
« Reply #1 on: December 27, 2013, 06:23:12 PM »
Yes, it has been dropping for some time. I remember a couple of years ago when it was at 10.68%. I think there are a couple of things in play here:
1. Underwriting in 2011 and 2012 was not great and hurt their overall returns. The good news is that 2013 returns remain solid.
2. Their mix of loans has been changing. The average interest rate charged at Prosper has dropped by 4-5% over the last couple of years. They are taking on more low risk loans which will also reduce overall returns. For this reason I have heard Prosper management say that their overall return number will continue to drop.
Publisher of the Lend Academy blog

See my returns here: http://www.lendacademy.com/returns

neals384

  • Full Member
  • ***
  • Posts: 107
    • View Profile
Re: Prosper Returns Dropping?
« Reply #2 on: January 01, 2014, 03:02:51 PM »
Not just the mix of loans, but the average interest rate by Prosper grade has dropped significantly.  This will pull down average returns in the future.

investforfreedom

  • Full Member
  • ***
  • Posts: 156
    • View Profile
Re: Prosper Returns Dropping?
« Reply #3 on: January 02, 2014, 12:23:48 PM »
Plus the fact that there are far fewer high quality loans in the D-HR categories.  And the dearth of good ones are gone in literally seconds.

moneylenda

  • Newbie
  • *
  • Posts: 3
    • View Profile
    • Email
Re: Prosper Returns Dropping?
« Reply #4 on: March 19, 2014, 11:50:38 PM »
So I was doing some research on nickel steamroller and I noticed that the 2011 and 2012 vintages are performing relatively poorly.  Any idea why?  2009 and 2010 look fine, and 2013 Q1 and Q2 look fine so far (though the 2013 needs some more seasoning).  I've seen some people say their underwriting was "worse," but what exactly does that mean?  Was Prosper too lax with making sure people were telling the truth?

I've also seen some people say interest rate by grade has been dropping.  Does anyone know of a source where interest rate by grade over time is graphed?  Obviously, I know I can go calculate it myself with the data dump, I was just wondering if someone had already done it...

Galli

  • Newbie
  • *
  • Posts: 37
    • View Profile
    • Email
Re: Prosper Returns Dropping?
« Reply #5 on: March 23, 2014, 12:08:25 PM »
Are you looking at origination in 2011/2012 or the collective return in that period?

dontvote

  • Full Member
  • ***
  • Posts: 226
    • View Profile
    • Email
Re: Prosper Returns Dropping?
« Reply #6 on: April 03, 2014, 12:56:30 PM »
it's interesting because my loans from this time frame outperform my lending club loans by about 5%. I guess my crappy algorithm works better with prosper's crappy underwriting. I'm multiplying negative numbers over heah!

So I was doing some research on nickel steamroller and I noticed that the 2011 and 2012 vintages are performing relatively poorly.  Any idea why?  2009 and 2010 look fine, and 2013 Q1 and Q2 look fine so far (though the 2013 needs some more seasoning).  I've seen some people say their underwriting was "worse," but what exactly does that mean?  Was Prosper too lax with making sure people were telling the truth?

I've also seen some people say interest rate by grade has been dropping.  Does anyone know of a source where interest rate by grade over time is graphed?  Obviously, I know I can go calculate it myself with the data dump, I was just wondering if someone had already done it...
dontvote

Interest Radar IRR: 46.11%
NSR ROI: 41.22%
Average Loan Age: Your Moms