Orchard has published its quarterly report on loan originations for the online lending industry.
According to their numbers, origination volumes continued to drop in Q3 from Q2 2016. The decline was significant too – decreasing by 21% in Q3 and down 50% from the peak in Q4 of 2015. Orchard pointed to the fact that originations have now declined three consecutive quarters indicative of a challenging environment for online lenders as they struggle to regain the growth experienced during 2015.
Orchard pointed to the fact that originations have now declined three consecutive quarters indicative of a challenging environment for online lenders as they struggle to regain the growth experienced during 2015.
David Snitkof, co-founder & Chief Analytics Officer at Orchard told Crowdfund Insider;
“We are optimistic at the chances of an uptick in originations for Q4, as the drop in volumes we saw this year appears to have leveled off. While we are seeing an increase in charge-offs across consumer originators, these appear concentrated in riskier grades of older vintages, and the effect is magnified by increasing average portfolio tenure. In response, several originators have recalibrated their underwriting criteria, which may lead recently-issued vintages to perform quite well.”
Orchard said that loan charge-offs have increased – much of it due to the growth of subprime loan platforms. The riskier loans also carry a higher interest rate paid to investors.
Orchard said that early indications show 2015 vintage performance on the same track as the 2014 vintage.
Lending Club, the largest marketplace lending platform, announced Q3 results earlier this month. Loan originations for Lending Club in Q3 2016 were $1.97 billion, up 1% compared to the $1.96 billion reported in Q2 of 2016, but down 12% compared to $2.24 billion in the same quarter year prior.