SFA Research Corner: Home Equity Revival: Trends in Non-Agency RMBS
article by SFA
To date, Non-Agency RMBS supply stands at $18 billion, with non-QM-backed deals and jumbo mortgages leading issuance. Key drivers of issuance include non-QM-backed deals, jumbo mortgages, credit risk transfer securities, and “other”. In the “other” category, RMBS backed by HELOCs and CES loans emerge as leaders, boasting $1.4 billion in issuance. Today’s HELOC loans reflect stricter criteria post-2008, leading to lower delinquency rates. Concerns about the “using-the-home-as-an-ATM” mindset have diminished with higher interest rates. With growing demand for equity release products, market participants anticipate HELOC/CES-backed RMBS issuance in 2024 to match or exceed the $5 billion recorded in 2023.