A popular online lending unicorn is raising its rates because of global market chaos
Going forward, loans made through Prosper's consumer-lending platform will cost an average 1.4% more for borrowers, The Wall Street Journal's Telis Demos and Peter Rudegeair report, citing an email to investors.Rates will jump to an average 14.9%.Advertisement
Prosper isn't the first online lender to raise rates. LendingClub in December decided to raise rates by 0.25%, following the Federal Reserve's decision to hike its key interest rate.
It readjusted rates again in January.Returns on online consumer loans have been dropping for some time - they hit a 3-year low in December, according to the Journal report.
That means investors who buy those loans are looking to other, higher yielding investments, which is problematic for fintech lenders like Prosper.But what's really notable about Prosper's decision to raise rates now is the reasoning behind it.Prosper made the decision because of the"turbulent market environment" in 2016, according to the report.Advertisement
Apparently that's making lenders a bit jittery.
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