The Prosper Trendline

Here’s a graph of the total value of loans originated on Prosper over the past 6+ months.

I’ve been an active lender for over a year now. The market has become more efficient but it is still relatively inefficient. In the short-term, that’s good for lenders because it causes rates that are higher than they should be. In the long term, of course, the market has to develop further for the loans to get paid back.

What’s interesting is that the trend for loans originated seems to be improving.

10/25 – $20M in loans
1/10 – $30M (granted, some of the slowness could be due to the holiday season)
2/27 – $40M
4/3 (estimated) – $50M

Is There an Emotional Attachment on Prosper?
When I first started out, I looked at every loan. Now I have standing orders and barely look at any of the loans.

Prosper has been called the eBay of loans, but standing orders make Prosper very different from eBay in a fundamental way. With eBay buyers are typically looking at items individually. When you’re buying a computer, or a GPS or something like that, there’s little emotional attachment. But when you’re buying a photograph or an antique, there’s a very real emotional connection between buyers and the item in question. Buyers look at each item individually. On Prosper, for the vast majority of lenders, I suspect it’s purely about return. But that difference might not matter; where there are lenders and borrowers, there’s a market. And in this case, it seems to be one that is rapidly getting more liquid.