tag:blogger.com,1999:blog-7209606.post8667222556472769805..comments2023-08-24T02:55:54.336-07:00Comments on Random Thoughts: Lending Club Base Interest Rate - Excess Lending Capital SupplyAnil Guptahttp://www.blogger.com/profile/04626638497955200142noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7209606.post-90369177078645685222014-09-15T08:21:20.812-07:002014-09-15T08:21:20.812-07:00Hi,
I came across this article while researching ...Hi,<br /><br />I came across this article while researching the drivers behind LC's Adjustment for Risk and Volatility and the estimates for the assumed default rate for sub-grade A1 and G5.<br /><br />Have you had any followups to this analysis or any insights as to how the differences in estimated defaults between credit grades translate into interest rates?Anonymoushttps://www.blogger.com/profile/06126807193822263171noreply@blogger.comtag:blogger.com,1999:blog-7209606.post-79133886047669052282012-06-11T17:53:16.397-07:002012-06-11T17:53:16.397-07:00Peter,
It is amazing to see the sudden jump in lo...Peter,<br /><br />It is amazing to see the sudden jump in loan listings in the past week. I don't know what could cause such a jump. I doubt marketing levers can make such a drastic jump in such a short time. It more looks like backlog clearing.<br /><br />I also noticed that for past few months LC was taking lot longer to issue loans after being fully funded but within last week the loans are being issued more quickly after being fully funded.<br /><br />Trends in both listing and issuance seem to indicate loosening of resource-constraints that LC might had.<br /><br />Could this jump be a precursor to interest rate adjustment? We will find out soon. I expect another adjustment to occur within next couple of months, a hunch based on the spread between interest rate on credit card loan and on 6 months CD.<br /><br />Thanks for the comment.<br /><br />AnilAnil Guptahttps://www.blogger.com/profile/04626638497955200142noreply@blogger.comtag:blogger.com,1999:blog-7209606.post-21097104208705833682012-06-11T13:35:04.410-07:002012-06-11T13:35:04.410-07:00Great explanation Anil. I would say that these day...Great explanation Anil. I would say that these days the increasing/lowering of the base rate has more to do with perceived economic conditions than with trying to balance lenders and borrowers. Look at what has happened in the past week or so. We have gone from under 1,000 new loans on the platform to over 1,800 loans in a little over a week with no change in interest rates. Marketing has tremendous control over how many loans appear on the platform.Peter Rentonhttp://www.sociallending.netnoreply@blogger.comtag:blogger.com,1999:blog-7209606.post-42939331079182886532012-06-11T12:17:09.233-07:002012-06-11T12:17:09.233-07:00Thomas,
Thanks for the comment. I am working on a...Thomas,<br /><br />Thanks for the comment. I am working on another post continuing this discussion. BTW, any thoughts on measuring excess supply vs demand directly instead of inferential.<br /><br />Thanks.<br /><br />AnilAnil Guptahttps://www.blogger.com/profile/04626638497955200142noreply@blogger.comtag:blogger.com,1999:blog-7209606.post-88630735772794273852012-06-11T10:53:54.838-07:002012-06-11T10:53:54.838-07:00Thanks Anil - very interesting read. I'm conti...Thanks Anil - very interesting read. I'm continuing to watch for declines in the base rate and any excess supply of capital vs. borrower demand.Thomas DeLonghttp://twitter.com/thomasdelongnoreply@blogger.com