Experts in the industry disagree on when the tides of the property market will turn. While some are optimistic, others feel things might get worse before they get better. But one thing remains constant:
For a few solid reasons, this is the ideal time to dive into non-QM. First, the market for non-QM is positioned for long-term, sustainable growth. This is a direct effect of a massive movement in the United States toward the self-employed workstyle. Non-QM mortgages are required for contract or ‘gig’ employees, entrepreneurs, and company owners who may be unable to furnish the W-2 tax form necessary to prove qualifying income for a typical loan.
Diversification is another motivation to go into non-QM lending right now. Almost every lender is seeking new revenue streams to offset the fall in refinances and the extremely tight purchase market. Non-QM loans give access to millions of consumers who seek mortgages but do not qualify for regular loans.
The timing is also correct in terms of the capital markets. Institutional investors gain from residential mortgage credit diversification. Historically, RMBS have done rather well during stock market downturns.
In today’s turbulent mortgage market, technology has become something of a silver lining. With revenue slowing, lenders may devote time to looking within and identifying the bottlenecks that are holding them back.
Non-QM mortgage rates and funding expenses have risen as a result of the steep rise in long-term interest rates since the beginning of the year. Following the instability of the larger capital markets, which soon retrenched into the “risk-off” mode as interest rates began to rise gradually, credit spreads widened, and market liquidity in non-QM loan and bond markets generally deteriorated. Non-QM RMBS new issuance was busy in the first quarter of 2022 before slowing significantly in early March 2022 due to exceptional market volatility. Nonetheless, the credit quality of new issue non-QM RMBS remained stable despite the tumultuous markets.
As we enter the last weeks of 2022, AHL Funding wishes all industry participants a pleasant and healthy Christmas season. Are you searching for a lender who gives your borrowers freedom, lets them “tell their story” on difficult Non-QM loans, and doesn’t take days to underwrite your files? Bring them to AHL Funding, where we use common sense in our underwriting.
Brokers should work with a professional and specialist non-QM lender such as AHL Funding with over 3 decades of experience in alternative finance to ensure they are well-educated on the non-traditional products available in the market. Ready to Sign With Us?