I've switched from funding loans at $50 each to $100.
My average interest rate is 13.8%.
In general I'm shooting for A or AA credit grades at higher interest rates when possible. As interest rates in general are rising, I'm hoping this will diminish my exposure to increasing defaults - specifically I'm concerned about people defaulting on variable rate mortgage products and then defaulting on the rest of their debts.
About 1 out of 2 bids comes back to me as an outbid. This usually happens when the auction is oversubscribed and new participants push the interest rate down. I don't usually provide a substantial margin for this situation. Though I'm starting to do so with newer loans. Overall, being outbid is frustrating and time consuming. Here are a few lessons learned:
- Treat interest rate bidding like ebay, bid near the last 1/3 of the auction, hold off at the beginning to get the lay of the land.
- Auctions ending in 1-2 days are usually the best for me.
- The Savage Number's analysis tools are very helpful, but perform you own underwriting as well. Use it as a directional guide.
- I avoid funding anyone with current delinquent debt.
- I've increased my average investment to $100 per loan.
- My aggregate loan portfolio will probably be $10k once I'm fully funded.
I'd feel alot more comfortable with prosper if they could create a secondary market where loans or packages of loans could be resold as bonds are today. This would provide excellent liquidity as well as some unique buying opportunities.
Have a wonderful day,