Last week's post on P2P lending traffic prompted several comments on how worthless website traffic is as a metric, especially when the two major players make their loan-production numbers public. With that in mind, I present the Q1 total loan production for Lending Club and Prosper.
While Prosper still had twice the overall loan volume of Lending Club in Q1 ($21 vs. $10 million), Lending Club is closing the gap in the prime/near-prime market (FICO 640+) originating two-thirds the volume of Prosper in March ($4 vs. $6 million). But if you take into account Lending Club's more stringent debt-to-income requirements (max 30%), the newcomer actually surpassed Prosper in these lower-risk loans ($4.1 vs. $3.7 million in March).
While the two-horse race is an interesting sidelight, the more important statistic is industry growth. In Q1, Prosper and Lending Club combined for more than $30 million in originations, up $10.7 million (55%) compared to about $20 million in Q1 2007. Only $3.4 million of the Q1 total (17%) was subprime, compared to $7.0 million (36%) a year ago.
Loan originations doubled in the prime/near prime (Prosper grades AA to C and all of Lending Club) ending the quarter at just under $27 million.
Why so much attention to a tiny sliver of the $2.5 trillion U.S. consumer loan market? It's new. It's different. It's social. And it's an experiment in online finance we get to watch in real time thanks to the transparency of the lenders. For more info on the market, see our recent Online Banking Report on P2P lending.
Q1 2008 Loan Volume: Prosper vs. Lending Club
in $ millions (U.S. only)
| Prosper All Grades |
Prosper AA-C* |
Prosper AA-C Low DTI** |
Lending Club*** | Total | |
| Q1 2008 | $20.5 | $17.1 | $10.7 | $9.8 | $30.3 |
| March | $7.3 | $6.0 | $3.7 | $4.1 | $11.4 |
| Feb | $6.0 | $4.9 | $2.9 | $2.9 | $8.9 |
| Jan | $7.2 | $6.1 | $4.0 | $2.8 | $10.0 |
| Q1 2007 | $19.6 | $12.6 | $8.0 | n/a | $19.6 |
| '08 vs. '07 | +$0.9 | +$4.5 | +$2.7 | — | +$10.7 |
| % change | +4.6% | +36% | +34% | — | +55% |
Source: Online Banking Report compilation of company data, 2 April 2008
*Loans made to Prosper grade AA through C borrowers (FICO 640+)
**Loans made to Prosper grade AA through C borrowers with debt-to-income (DTI) less than 30%
***Lending Club only makes loans primarily to the "prime/low DTI" segment (FICO 640+, DTI <30%)
Note:
1. These prime/near prime/subprime distinctions can help financial institutions compare their prices to the marketplace rates.