December 2025 concluded with the Non-QM segment reaching another milestone, underscoring continued expansion in alternative lending amid evolving borrower and investor demand. According to Optimal Blue’s December 2025 Market Advantage mortgage data, Non-QM loans accounted for more than 9% of total mortgage lock volume, representing a notable month-over-month increase of approximately 50 basis points and maintaining a clear upward trajectory as the year closed.
Non-QM production contributed meaningfully to the broader non-conforming loan category, which expanded to roughly 17% of total mortgage locks in December, up slightly from November and well above levels seen in prior periods. This trend reflects shifting origination patterns as the conforming mortgage share modestly contracted within the same timeframe.
“Finishing the year with higher lock volume in December is a clear signal that borrower demand has adjusted to today’s rate environment,” said Mike Vough, senior vice president of corporate strategy at Optimal Blue. “Refinance activity continues to do the heavy lifting, but the fact that purchase volume held essentially flat month over month and finished the year higher than last December speaks to a market that is more durable than many expected.”
Sector analysts reported that debt-service coverage ratio (DSCR) and bank statement loans were principal drivers of Non-QM growth last month. Bank statement programs, in particular, posted solid monthly gains even as some other Non-QM sub-categories showed mixed performance. Investor-oriented Non-QM activity also remained a substantial share of the segment, pointing to sustained appetite among portfolio lenders and non-agency investors for alternative credit profiles.
Industry participants interpreted December’s results as evidence that the Non-QM market continues to mature, with lenders increasingly incorporating these products into their origination mix to offset pressures in traditional conforming channels. The expansion of Non-QM volumes comes alongside broader secondary market adjustments, including shifts in execution strategies and pricing dynamics.
“December’s secondary data shows lenders actively recalibrating execution as spreads widened and pricing discipline remained tight,” Vough added. “The shift back toward bulk aggregation, combined with stable top-tier pricing and rising MSR values, reflects investor demand that is focused on end-of-year balance sheet management and long-term value as we head into 2026.”
