Non-qualified mortgage locks grew 8% versus August, while adjustable rate mortgages recorded their highest share since Optimal Blue started its Market Advantage reports in 2019. High mortgage rates during September were largely responsible for a 26% drop in rate lock activity during the month compared to a year earlier. That contrast is the whole story.
Nonconforming mortgages, where Optimal Blue reports non-QM data, had a 23.6% share in September. Conforming was less than half of the total volume at 46.2%. I read that as the conforming box shrinking in real time.
ARMs reached 14% of total lock volume in September, up from 10.5% in August. The 30-year conforming fixed-rate mortgage averaged 7.5%, its highest level since November 2023, according to the Mortgage Bankers Association.
So far this year, $80 billion of non-QM has been securitized, of which $33 billion came from 2025 production. This year's projected $175 billion in total non-QM production will see a significant amount come to the securitization market before the end of the year and in 2027, according to Bank of America Securities.
The question for every lender: build the capability to serve the borrowers outside the box, or watch someone else do it.