U.S. non-QM market growth drives originations toward $200 billion, S&P says
More than a decade after emerging as a niche segment, the U.S. non-qualified mortgage market is becoming a more standardized part of housing finance. S&P Global Ratings expects non-QM originations to reach $200 billion in 2026, while related residential mortgage-backed securities issuance is projected to rise to $100 billion.
Highlights
- S&P Global Ratings reports non-QM originations are projected to rise from $45 billion in 2019 to $200 billion by 2026.
- Residential mortgage-backed securities issuance backed by non-QM loans is expected to grow to $100 billion in 2026 from about $25 billion in 2019.
- Sharp growth in non-QM and DSCR lending signals increasing investor acceptance and mainstream adoption within U.S. mortgage and structured finance markets.
Origination and securitization expansion
As reported by S&P Global Ratings, the non-qualified mortgage origination and securitization market has become increasingly commoditized since its inception more than a decade ago.The report says non-QM lending, which also includes business purpose loans known as debt service coverage ratio, or DSCR, loans, has expanded sharply since 2019. Those loans are underwritten to the expected cash flows of the property.
According to the figures cited in the report, non-QM origination rises to an expected $200 billion in 2026 from roughly $45 billion in 2019. In the residential mortgage-backed securities market, issuance backed by those loans grows to an expected $100 billion from about $25 billion in 2019, after almost negligible volume in 2016.
Implications for U.S. housing finance
The projected increase points to stronger investor acceptance of non-QM assets within the broader mortgage finance market. Growth in both lending and securitization suggests the segment is moving further into the mainstream as issuers and investors scale activity.S&P says the report does not constitute a rating action, indicating the publication is intended as market analysis rather than a credit decision. Even so, the data underscores how non-QM and DSCR products are taking a larger role in U.S. mortgage origination and structured finance.
Our earlier report on sovereign resilience in a higher-rate regime explained how persistent geopolitical shocks and elevated fiscal spending can strain government finances as refinancing costs rise. We noted that the pressure is especially acute for emerging and frontier markets, where interest-service burdens are high relative to narrower revenue bases, leaving sovereign credit profiles more exposed when inflation and funding costs stay elevated.
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