There’s been a significant shift in mortgage market composition, with non-conforming loans — including jumbo and non-QM products — climbing 4.39 percentage points year-over-year to reach 16.8% of total volume, according to the July 2025 Optimal Blue Market Advantage report.
This marks the highest share for non-conforming loans since early 2022, fueled by a record-setting 8.0% share for non-QM loans.
Non-QM Hits All-Time High
Non-QM loans have steadily gained ground over the past 12 months, rising from approximately 5.21% in July 2024 to 8.0% in July 2025.
Within the segment:
- Investor / DSCR loans account for 28.7% of Non-QM volume, up 2.79 points YoY.
- Bank statement loans hold 33.7% share, while other alternative documentation methods make up 37.6%.
This growth highlights stronger demand from real estate investors and self-employed borrowers, even as affordability pressures continue to dampen traditional purchase activity.
Other Notable Year-Over-Year Shifts
While non-conforming growth topped the list of biggest deltas, the report points to several other meaningful changes.
Loan Purpose Trends:
- Cash-out refinance volume jumped 26.5% YoY.
- Rate-and-term refinances rose 12.5% YoY.
- Purchase activity was essentially flat (-0.3% YoY), reflecting ongoing affordability challenges.
Property Type:
- Single-family share climbed 4.62 points YoY to 63.5%.
- Planned Unit Development (PUD) share fell 4.23 points over the same period.
Pull-Through Rates:
- Purchase pull-through improved to 84.0%, up 2.32 points YoY, reflecting stronger closing efficiency.
- Refinance pull-through dipped slightly (-0.40 points) to 61.1%.
Regional Highlights
The New York metro posted the largest dollar gain among top MSAs, with average loan amounts up about $42,000 YoY to $587K.
Rates And Borrower Profiles
The 30-year conforming Optimal Blue Mortgage Market Index ended July at 6.72%, slightly higher than a year ago (6.67%). Average FICO scores slipped marginally for conforming loans (756 → 755) and FHA loans (676 → 675), while they remained steady for VA loans at 713.
Why It Matters
The sharp rise in non-conforming and non-QM share underscores a shifting market dynamic: originators are finding more opportunities outside the agency box, particularly in investor-driven and self-employed borrower segments.
With purchase volume flat and affordability constraints persisting, lenders may increasingly rely on this growth area to maintain production in the second half of 2025.
