March 1, 2017

Prosper Announces Pricing Changes

By Brad Pennington

Prosper will be updating rates offered to people who borrow through the Prosper platform as of March 2nd. This update will impact AA, A and B rated loans, with an increase in pricing of approximately 60bps, 50bps, and 20bps, respectively. Additionally, HR rated loan rates will decrease by 10bps, which is driven by the desire to remain below 35.9% APR.

Over the past year Prosper has made a handful of conservative pricing adjustments to maintain a balanced, sustainable marketplace that benefits both our borrowers and investors. These pricing changes are a direct result of the forward-looking credit market, interest rate expectations, the US credit environment and the competitive environment in US consumer unsecured lending.

Estimated Impact

The below breakdown of the estimated impact and a chart that highlights the new base loss grid.

  • Coupons and IRRs in the AA-B regions of the portfolio will be higher
  • AA-B originations as % total portfolio expected to increase as a result of modest downward loss adjustment on selected high-quality borrower populations
  • Platform AA-HR portfolio borrower rate expected to decrease by ~ 7bps
  • Platform AA-HR portfolio loss expectation expected to decrease by ~ 9bps
  • Portfolio IRR expected to increase by 2bps vs. estimated portfolio return of 7.86% for January 2017 monthly vintage

Base Loss Grid 03.02