Non-qualified mortgage (non-QM) loans have grown more popular with brokers and lenders. However, challenges are emerging. As inflation woes and rising borrowing costs persist, even the booming non-QM sector faces margin compressions due to reduced purchase and refinance loan volumes.

“Whenever there’s a margin compression game, that means that we’re coming out of a cycle and going into a new cycle. We just came off of one of the largest refi booms in 2020 and 2021,” said Excelerate Capital CEO Thomas Yoon. “And now we’re in a purchase market environment with margin compression, and what that has when that happens, our industry tends to shrink down and we right size. That is a problem everyone will face in our industry, and Excelerate Capital is no different.”

Despite the current economic climate, the CEO said he is confident that non-QM will continue to thrive, reflecting the sector’s sentiment.