May 2026 Update: Non-QM Deteriorates Against a Resilient Mortgage Market

dv01’s latest Performance Report finds further divergence between Non-QM and the broader mortgage market. Intercontinental Exchange Mortgage Monitor data shows U.S. active mortgage counts reached 55.1 million in April 2026 despite soft home sales. Conversely, Non-QM performance weakened further in May, weighed down by rising impairments and weaker curing behavior.

What the data shows: 

• Impairments continue to climb: 30+ Iimpairments rose 30 bps in May, the third increase in four months, with cure and Made Payment rates at all-time lows continuing to pressure performance.
• Doc type remains a major performance differentiator: Impairments among full doc loans have fallen more than 100 bps this year and sit below their Summer 2022 lows, while self-employed and bank statement loans continue to deteriorate.
• Lower FICOs are driving impairment pressure: Below-700 FICO borrowers drove over 80% of the impairment increase, with Below-660 loans approaching 20% impaired.
  

What we’re watching: 

• Does continued growth in mortgage counts suggest homeownership rates among younger households should continue to strengthen given substantial evidence that new borrowers increasingly lean younger?
• Does the clear divergence across doc types suggest self-employed and varied cashflow borrowers are struggling more with the recent bouts of sticky inflation?
• As delinquencies slowly transition into defaults, will losses begin to impact the conversation about Non-QM structures and residual cash flows?