Optimal Blue data shows non-QM lending, ARM usage is expanding
Non-QM represented 12% of production in September as the 30-year conforming rate ended the month at 7.39%
The recent surge in non-QM lending and adjustable-rate mortgage (ARM) usage is a notable trend in the mortgage industry. According to Optimal Blue data, non-QM loans accounted for 12% of production in September, which is a significant increase. This growth is likely driven by borrowers who don't fit the traditional conforming loan criteria, such as those with non-traditional income sources or credit profiles.
The 30-year conforming rate ended September at 7.39%, which is a key factor contributing to the rise in non-QM and ARM usage. As interest rates continue to climb, some borrowers may be seeking alternative loan options that offer more flexibility or lower upfront costs. Non-QM lenders are filling this gap by providing mortgages that don't conform to traditional standards. Meanwhile, ARMs are becoming more attractive as they often offer lower initial interest rates, although borrowers must be aware of the potential risks associated with rate adjustments.
Looking ahead, it's essential to monitor how this trend evolves, particularly in terms of borrower behavior and lender strategies. As interest rates remain high, we can expect to see continued growth in non-QM and ARM usage. However, it's crucial for lenders and regulators to ensure that borrowers are properly informed about the risks and benefits of these loan products. Lot professionals should also keep a close eye on this trend, as changes in mortgage lending can impact housing demand and, ultimately, the types of properties that are in demand.
Originally reported by housingwire.com. LotNews adds analysis for real estate & property readers.