Non-QM market set for huge growth in 2022, says VP

And with the latest reports showing that applications to refinance a home loan were down by 54% from a year ago, brokers would be well advised to look for alternative forms of lending, he said.

“The trend that we’ve seen in the last few weeks since the beginning of the year is that a lot of a lot of factors have come into play. People are talking about refi declines and margin compression, and it’s really hitting the mortgage companies in numbers, financials and everything,” he said, highlighting concerns that the market was becoming increasingly competitive as companies faced lower profit margins.

“We’re seeing that layoffs are beginning to happen across the board throughout the mortgage sector. The industry built itself to be a $4 trillion plus business, and now it’s going to shrink to a $2.5 trillion business. So there’s lots of overcapacity.”

The double whammy effect of lower volume and lower profit contrasted with the “huge growth” already being experienced in non-QM this year, he said.

“We are in the exact opposite mode, where we’re seeing huge growth, huge interest in non-QM, and truly stronger than it was last month.”