Why non-QM lending could be set for a big year in 2025

Demand
remains
strong
despite
overall
housing
market
cooldown

An
undersupply
of
housing
has
left
the
US
millions
of
homes
short
of
what’s
required,
with
construction
financing
for
builders
and
developers
now
in
strong
demand
because
of
their
inability
to
secure
financing
elsewhere,
Davis
said.

Mortgage
demand
fell
for
the
sixth
straight
week,
with
applications
dropping
by
10.8%
as
volatility
in
Treasury
yields
continued
to
drive
mortgage
rates
higher,
according
to
data
from
the
Mortgage
Bankers
Associationhttps://t.co/dIgW0CJkDP

—
Mortgage
Professional
America
Magazine
(@MPAMagazineUS)

November
6,
2024

That
also
means

fixing
up
properties
that
aren’t
currently
habitable
and
bringing
them
back
to
the
main
housing
market.
“Being
a
part
of
the
solution
to
the
supply-demand
imbalance
in
housing
over
the
next
10
years
will
give
originators
a
competitive
advantage
–
having
access
to
the
full
suite
of
non-QM
that
serves
self-employed
borrowers,”
he
explained.

Other
trends
include
a
growing
number
of
homeowners
who
are

accessing
equity
in
their
home
to
consolidate
debt
and
improve
their
cash
flow,
or
renovating
to
stay
in
their
homes
for
longer.

Loan
originators
should
be
attuned
to
that
reality,
Davis
said,
as
well
as
focusing
on
a
wide
variety
of
referral
partners
and
not
solely
realtors.
“There
are
other
referral
partners
and
other
things
originators
could
[use]
today
in
order
to
be
more
successful
and
drive
higher
origination,”
he
said,
“[such
as]
working
with
CPAs
and
accountants,
who
primarily
work
with
self-employed
people.”

Product
expansion,
non-QM
growth
expected
in
2025

As
for
2025?
Further
product
expansion
is
in
the
cards
for
the
year
ahead,
a
reflection
of
a
market
that’s
likely
to
see
continued
uptake
of
non-QM
products
among
loan
originators
who
don’t
currently
have
it
in
their
toolkit,
according
to
Davis.