Housing Demand Holds Firm; Non-QM Impairments Rise in California

The latest dv01 research is now available for download.

Quick Insights

• Mortgage market shows resilience: Total active mortgages rose by 850,000 in 2024, despite low existing home sales and historically weak prepayment activity—signaling strong demand from first-time buyers and new home sales.

• Non-QM Impairments surge: February impairments rose 55 bps—the largest non-COVID increase in sector history—driven by California wildfires, seasonality, and broader credit weakness.

• California dominates deterioration: California accounted for two-thirds of the national impairment increase, with TX/OK/LA and FL/GA/SC also reversing recent improvements.

• 2023 Cash-outs underperform: 2023 vintage cash-out loans show 3.5x higher 60+ delinquency rates than 2021/2022 comps, highlighting persistent stress among higher-risk borrowers.

• Prepayment model accuracy holds: dv01’s Non-QM prepayment model continues to forecast behavior within 1 CPR across all document types, reinforcing its predictive reliability.