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Non-QM equity lending grows as more borrowers leverage home equity
The discussion pointed to record homeowner equity, rising first-lien rates below 5 percent for many borrowers, and agency gaps for scenarios outside traditional lending.
Mortgage News Daily highlighted panel discussion at the California MBA Western Secondary focused on the growth of non-Agency, equity lending as a share of residential origination. The outlet said the shift is tied to changes in the economy and borrower profiles, alongside record homeowner equity.
According to Mortgage News Daily, many borrowers face consumer pressure such as high debt, while a large portion of owners do not have a mortgage, enabling more equity extraction and owner “levering.” The outlet also cited a high percentage of first-lien mortgage rates below 5 percent, describing it as a “lock in effect.”
From Freddie and Fannie’s perspective, Mortgage News Daily said the agencies do not have answers for many borrowers and scenarios in this segment. It also noted that lenders that refuse to adapt to these demographics and lending needs do so at their own peril.
The coverage additionally referenced housing finance commentary on diversifying home-price risk to improve homeowner resilience and support safer no- or low-down-payment mortgage lending, according to Mortgage News Daily. It said industry participants interested in the concept can contact the authors.