Ratings agency Fitch reported on Wednesday that non-qualified mortgage (non-QM) residential mortgage-backed securities (RMBS) markets have started 2026 on solid footing, despite steadily rising delinquency rates across the sector.
Fitch’s first-quarter RMBS report indicates that non-QM prepayment rates ended February at 14.69% after peaking at 22.22% in November, while the 30-day delinquency rate increased to 7.26% from around 5.9% at the end of November and the low-6% range one year ago.
The serious delinquency rate increased from 2.9% to 3.61% from November through the end of February, with Fitch’s report current as of the February 2026 remittance, the company said.
“These increases indicate continued collateral deterioration across all NQM vintages,” the report read, using shorthand to refer to non-QM loans. “However, actual losses remain minimal relative to Fitch’s default expectation for the asset class, which is 17.76% for the 2025 vintage.”
Some analysts have described 2025 as a “dismal” year for non-QM performance, particularly compared to perceived outperformance over many quarters of economic volatility sparked by the COVID-19 pandemic. Varying degrees of distress across vintages underscore nuances in sector performance as volatility escalates again early in 2026.
Fitch’s updated data indicates that 2023 non-QM vintages remain the most challenged, with 30-day and 90-day delinquency rates of almost 11% and 6%, respectively. Serious 90-day delinquencies for 2024 and 2025 vintage non-QM loans were 2.31% and 1.18%, all of which posted higher rates than last winter.
Growing problems in non-QM performance come despite 2025 being a record year of issuance for non-agency markets, as lending segments traditionally served by government-sponsored enterprises Fannie Mae and Freddie Mac observe distortions from persistent affordability and supply pressures.
Non-QM impairments, including new delinquencies and loan modifications, spiked in November but did not recede in December, though the rate of new delinquencies slowed.
Measures of lending volume in the sector often include mortgages for borrowers requiring more flexible loan terms to accommodate more complex underwriting considerations, as well as business-purpose loans for single-family real estate investors.
