Rmbs Issuance Of Non-qm Loans Hits Record $20.9b In Q3

Residential-mortgage backed securities (RMBS) issuance of nonqualified mortgage (non-QM) pools reached record levels in the third quarter of 2025, according to a recent report from Morningstar DBRS that used data from CreditFlow.

The surge in issuance came even as credit performance showed signs of strain and the broader economic and housing environment cooled. The report found that monthly, quarterly and annual non-QM RMBS volumes reached record highs. The total of $20.9 billion in Q3 2025 was nearly double the $10.6 billion issued during the same period last year.

In regard to credit performance for these pools, delinquencies of 30 days or more ended the third quarter at 5.65%, little changed from the second quarter but 33 basis points higher than a year earlier.

Prepayment activity also ticked up, with conditional prepayment rates reaching 14.1% as conventional mortgage rates eased into the low- to mid-6% range and non-QM weighted-average coupons declined to the mid-7% range.

Deal-level performance remained largely stable. Credit enhancement continued to build as losses stayed low. Industry analysts said the sector’s performance was influenced by a “stalled” macroeconomic environment as the unemployment rate rose to 4.3% in August, the highest since 2021. The rate is still relatively low by historic standards, compared with 4.1% at the end of the second quarter.

But the report also noted that the broader economy rebounded, with gross domestic product improving from a 0.6% decline in Q2 to a 3.8% gain in Q3. Inflation held steady at an annualized rate of 2.78%, based on the headline Consumer Price Index.

Housing market activity remained subdued. Existing home sales held slightly above 4 million units on an annualized basis, similar to last year but still at historically low levels. New home sales showed modest improvement from the previous quarter and year, although full September data was not yet available.

Conventional mortgage origination volumes were largely in line with the same period in 2024. Despite muted economic and housing fundamentals, the report notes that non-QM RMBS structures continued to exhibit resilience, with collateral characteristics consistent with issuer trends.