Peer-to-Peer lending giant Lending Club recently reduced the interest rates that are being charged to borrowers by as much as 50 basis points. A recent statement made by Lending Club’s senior director of product marketing indicates the move was because default rates amongst its borrowers have been lower than expected.
Borrowers with excellent credit on Lending Club are now able to take out unsecured loans with interest rates as low as 6.39%. High-risk borrowers may be charged as much as 21.64% APR for the unsecured loans that Lending Club offers.
Lending Club did not make an official announcement when making the rate changes, but a statement made by the company’s senior director of product marketing, Rob Garcia, made to our friends at FiveCentNickel indicates that the move was made following lower than expected default rates.
The move also underscores the current inequality between the amount of capital available from lenders and the demand for unsecured loans from borrowers. Comments made by various Lending Club executives indicate that there’s currently an excess of lenders and a shortage of borrowers. As a result, the company has made changes to its advertising programs, such as changing its affiliate program to incentivize its partners to attract more borrowers.
The news of lower interest rates at Lending Club will be welcome news for borrowers. Before the most recent rate decrease, Lending Club borrowers were already getting better than average interest rates compared to industry averages for unsecured loans.
