BofA Projects $100 Billion in Securitized Non-QM Mortgages

Bank of America Securities (BofA) anticipates that the non-qualified mortgage (non-QM) sector will experience remarkable growth, projecting $100 billion in securitization issuance by 2026. This prediction comes on the heels of a record-breaking third quarter in 2025, where non-QM residential mortgage-backed securities (RMBS) reached an impressive $20.9 billion. As the housing market continues to evolve, non-QM loans are gaining traction among investors and borrowers alike. These loans, which do not conform to traditional underwriting standards set by the Consumer Financial Protection Bureau (CFPB), offer more flexible options for individuals who may not qualify for conventional loans. This includes self-employed applicants and those with non-traditional income streams, providing access to homeownership for a broader demographic. The surge in demand for non-QM loans has prompted a growing interest from lenders and investors looking to capitalize on the potential profitability of these products. BofA’s bullish stance on the sector reflects a positive outlook on the broader mortgage market, driven by the need for innovative loan solutions that cater to various financial situations. The anticipated rise in securitization issuance also signifies increasing confidence in the credit quality and performance of non-QM loans. As the market matures, investors are becoming more familiar with these assets, leading to enhanced transparency and stability. Non-QM securities are expected to attract a wider range of buyers, making them an appealing option for capital allocation in the mortgage-backed securities arena. BofA's projections suggest that the non-QM market might be entering a new phase of growth, resembling the journey of Cinderella from obscurity to being in the spotlight. As lenders adapt to changing market dynamics, the innovative characteristics of non-QM products are likely to play an integral role in addressing housing affordability challenges and expanding access to credit. Ultimately, BofA’s insights highlight a significant moment for non-QM investments, underscoring the importance of adapting to the diverse needs of borrowers while also providing opportunities for investors seeking stability in the often-volatile housing market. As 2026 approaches, the non-QM sector could indeed emerge as a robust segment in the mortgage industry, offering a vital connection between credit accessibility and sustainable homeownership.