Last April, rate-lock volumes for non-qualifying mortgage (non-QM) loans were just above 6% of total mortgage activity, about double the market share of April 2023, two years prior.
Then the non-QM sector went on a tear in the second half of 2025, surpassing 8% of lock volumes in August and exceeding 9% of activity in December.
That momentum cooled last month, however, according to mortgage technology provider Optimal Blue, which released its Market Advantage mortgage data report for January on Tuesday. Building on 30% annual growth in December, overall rate-lock volumes rose 16% over the month to finish 36% higher year over year last month.
After posting record non-QM activity in December, exceeding November’s previous record, non-conforming mortgage activity slumped from around 17% of lock volumes to about 15%, just 0.04% higher than a year ago.
Non-conforming loans, which fall outside the conforming underwriting guidelines set by Fannie Mae and Freddie Mac, as well as government guidelines set by the Federal Housing Administration and Department of Veterans Affairs, include non-QM consumer and business-purpose mortgages as well as jumbo, high-balance loans.
Within the non-conforming category, non-QM rate locks fell to just above 7.5% of overall activity — extending the sector’s share of monthly mortgage activity above 7% to nine consecutive months.
That monthly market share was slightly under 7% a year ago, according to Optimal Blue data, and slightly above 3% in January 2024 and January 2023. Amid the expansion, however, non-QM loan impairments — including delinquencies and loan modifications for borrowers unable to make their payments — rose sharply at the end of year.
Dv01, a loan-level data analytics platform owned by Fitch Solutions, recently reported that the sector’s overall impairment rate rose from 6% in November to 7.2% in December. Serious delinquencies across the non-QM sector averaged 2.9% at the end of November, up 0.38% from year-ago levels.
Bank statement loans comprised around 37% of non-QM rate locks in January, Optimal Blue reported on Tuesday, reflecting a 0.91% increase from December, 2.9% gain over the previous three months and 3.3% rise from year-ago levels.
Bank statement loans had retreated 1.85% annually in December, but contributed to that month’s record non-QM activity by rising 2.58% from November.
Offsetting gains in bank statement loan volumes, the category of non-QM loans that Optimal Blue describes as “all other” slipped 0.13% over the month, 4.5% over the prior three months and 3.9% over the year.
Investor and debt-service coverage ratio (DSCR) loans were more than 2% higher over the previous three months, but only 0.59% higher over the year after slipping 0.78% from December. Investor share was level with “all other” products at around 31.5% of total non-QM lock activity last month.
Optimal Blue says its rate-lock data represents about 35% of all mortgage transactions nationwide. The Mortgage Bankers Association also reported Tuesday that expansion in non-QM loan programs, especially those for mortgages with jumbo balances that exceed conforming loan limits, contributed to a rebound in mortgage credit availability in January.
