August 2026 Update: Non-QM Impairments Rise as Newer Rate-and-Term Loans Improve

dv01's latest Non-QM Mortgage Performance Report is now available. Driven by higher rates, prepayments fell 1.2 CPR, while performance diverged regionally, with FL/GA/SC impairments 150 bps above every other region. The report also analyzes Q2 Census data showing the homeownership rate fell to 65%, with the sharpest decline among households under 35.

What the Data Shows:

• Newer rate-and-term mortgages are performing better: 2024-H2 impairments ran more than 200 bps above 2024-H1 and 2023 at comparable deal ages, while 2025-H1 is showing stronger early performance.
• Impairments are rising again: 30+ impairments rose 14 bps MoM in August, the first monthly increase in three months and the third consecutive YoY increase.
• Curing behavior continues to deteriorate: Cure rates fell 260 bps in August, while Made Payment rates declined 200 bps, with both metrics now more than 200 bps lower YoY on average.
• Doc type shows the widest performance gap: Impairments among self-employed loans are more than 350 bps above DSCR and Full Doc, while performance gaps across FICO and LTV have remained relatively consistent.

What We're Watching:

• What does the return of impairment growth mean for second-half performance and the sector heading into 2027?
• What is driving the widening impairment gap between self-employed borrowers and other documentation types?
• What drove the sharp underperformance of 2024-H2 rate-and-term refinances, and why has that trend reverted in 2025-H1?