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US Consumer Online Lending Annual Returns

December 29, 2017

 

As we approach year end, marketplace lending investors may be interested in seeing how the US Consumer Online Lending Platforms fared in 2017 compared to previous years using the Orchard Index. Although December numbers are not in yet, it appears the full year of 2017 will be below 2016's annual return of 3.95% (the 2017 full year should be between 3.70%-3.85%). This may have been the reason why several institutions sold bulk whole loan portfolios earlier this year. Investors may be more hopeful in the future regarding new originations when reviewing the historical monthly returns.

 

For the months of October and November, monthly returns increased to 0.41% and 0.44% respectively from a range of 0.22% to 0.33% for the first 9 months of 2017. We will need to get more data to see if this performance becomes a trend - something to monitor for 2018. It is unlikely that the reason for the increase is due to LendingClub's halt to the issuance of F and G loans, since that did not occur until November 7. Many other consumer lending platforms have made changes with the goal of improving returns (closer to 6% annual) to whole loan investors. These increases may be the first signs of the improvements.

 

Orchard Platform provides more details on their site regarding the methodology on how the returns are calculated and what populations of loans are used. You can find it here:  https://goo.gl/5t21VM

 

Happy New Year.

                  

Resources:

 

https://www.orchardindexes.com/

 

https://help.lendingclub.com/hc/en-us/articles/115014049387-Changes-to-grade-offerings-on-the-LendingClub-platform

 

Disclaimer - This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.

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