Lender demand for non-QM and home equity securitizations is carrying into 2026, following a record year and fresh rankings of leading issuers.  

Non-QM securitization is on track to fuel an overall 25% increase in non-agency issuance this year, according to Standard & Poor's North American structured finance outlook.

"The market still is experiencing some headwinds but we feel like maybe 2026 is going to see some relief for borrowers, primarily in interest rates," said Tom Hutchens, president of non-QM lender Angel Oak Mortgage Solutions.

The Trump administration is set to explore several proposals to bolster housing, including rate-lowering agency mortgage-backed securities purchases and a possible ban on institutional investors, at the World Economic Forum in Davos, Switzerland this week.

Competitive origination of debt-service coverage ratio loans, and billions of dollars worth of outstanding non QM securities that will be eligible for redemption in the coming year, will play roles in how much issuance grows, according to Standard & Poor's.

"Depending on how much of that gets redeemed and relevered, that will also affect the issuance forecast,"  Jeremy Schneider, S&P's sector lead for residential mortgage-backed securities, said during the rating agency's online outlook discussion last week.

Who the leading non-QM issuers have been

Annaly led in the fourth quarter of last year, followed by Verus, NewRez, Ellington, JPMorgan, CrossCountry, Angel Oak, Morgan Stanley, Golden West and AmWest, according to a preliminary fourth-quarter 2025 ranking by David Akre, principal at Whole Loan Capital. 

"They've been by far the biggest issuer of the year," said Akre, who based his ranking on an analysis of rating agency presale reports. 

This analysis showed Annaly responsible for nearly $3.46 billion in issuance for the quarter, while the total for its closest competitor, Verus, was almost $1.72 billion.

Overall issuance set another record in the quarter, according to Akre, who was still working on estimating full-year figures for all issuers at the time of this writing. 

Non-QM numbers can vary as calculations may factor in different criteria for the loans included or whether issuance is based on presale information or only data on securitizations after they've gone to market. Volume changes can be considerable from quarter-to-quarter.

Headwinds and tailwinds

Lower rates are forecast for this year and historically lenders and originators tend to refocus on refinancing traditional mortgages when that happens. But forecasts suggest that kind of activity will likely be limited as many borrowers still have historically low rates from the pandemic.

Angel Oak Mortgage Solutions, which lends through third parties, is anticipating 50% year-over year growth in part because originators in the broader market have grown more familiar with the product, helping to fuel securitization. 

"During the last two years, so many first time, non-QM originators have gotten into the market," Hutchens said.

Verus also has called 2025 the year non-QM "went mainstream."

Lower rates are forecast for this year and historically originators tend to refocus on refinancing traditional mortgages when that happens. But forecasts suggest that activity will be limited as many borrowers still have historically low pandemic-era rates and lender profits are still down.

If government-sponsored enterprises that buy many middle-class loans were to reprice investor and second home loans more attractively, as some have speculated, it might have an impact on the non-QM market, but Hutchens said he considers policy actions unlikely to be disruptive. 

Non-QM and the broader mortgage market could face additional challenges, including softer home prices in some regions, slower employment growth and housing supply constraints.

Non-QM lenders generally say the performance issues resulting from these trends to date can be managed through underwriting and note that home prices are still historically strong. 

Home equity securitization prospects

Securitization of second-lien products such as home-equity lines of credit also will likely keep growing this year, according to S&P's Schneider.

"We do think closed-end second and HELOC will continue to be a market with some growth just given the large share of homeowners that continue to sit on very low first mortgage rates with the amount of equity that's been built up," he said during the rating agency's outlook discussion.

S&P rated an Achieve HELOC securitization for the first time recently, assigning its top investment grade rating to some of its notes in a $271.2 million transactionl that Jefferies co-sponsored.

Home-equity investment securitizations collateralized by non-debt products also are on-track to keep growing this year, according to Peter Silberstein, chief capital officer at Unlock, a player in the space.

"They've become much more frequently issued just in the last quarter," he said, noting that Unlock believes that its $400 million securitization during the period was the largest in the market to date at the time.

"As securitizations are more commonly issued, and as the transaction sizes increase, the asset class starts to move away from esoteric, you have more mainstream adoption," Silberstein said.

Cross-over with traditional housing finance players has some limits but HEI providers, who alternatively may refer to their products as home equity agreements, have formed some marketing partnerships with mortgage companies. Beeline Holdings offers both mortgages and home equity investment products. Some warehouse financing units at investment and regional banks or and mortgage servicers like BSI Financial also work with HEI companies.

Potential uncertainties for the HEI market have included oversight questions and Silberstein said he is part of an industry collective that is working to resolve these.

"We all operate with a unified voice promoting consumer friendly and sensible regulation," he said.