First-Time Home Buyers Are MIA. Landlords Are the Winners.
July 7th, 2025

Unaffordable house prices and high mortgage rates have slowed the flow of first time home buyers. It has been getting worse since 2022. According to the article, there were 1.1 million first-time buyers in 2024 — 380,000 fewer than in 2023 and almost half the historical norm. NAR data shows that the sharpest slowdown is happening among properties that cost less than $500,000. That is the price range that usually attracts first-time home buyers. Big home builders with financing arms such as D.R. Horton targeted young buyers by offering mortgage-rate buydowns that make monthly repayments more affordable. But these sweeteners are no longer working as well as they used to.

The flip side of sluggish demand from first-time home buyers is a rapidly swelling population of tenants. In a bullish sign for landlords, the number of renter households in the U.S. has reached a record 46 million. With more households stuck renting, apartment vacancy rates are falling. This should help landlords recover from a glut that kept a lid on rent growth for the past 18 months. The stage is set for fresh rent increases as the market tightens.

Non-QM reaps benefits from policy, market discipline: execs
May 22, 2025

Non-qualified mortgage (non-QM) lending is gaining momentum in 2025, fueled by political developments, marketing efforts, and growing demand from self-employed borrowers and real estate investors. Industry leaders noted that while potential policy shifts—such as Fannie Mae and Freddie Mac reforms under a possible Trump administration—could boost non-QM activity, the market is already expanding independently. Borrowers in this segment are typically more financially savvy, using non-QM loans for flexibility and tax advantages rather than just rate savings. Any tightening by GSEs historically drives more business to non-QM lenders.

The sector is also benefiting from improved investor confidence and broader liquidity. While historical data on non-QM performance is limited, strong underwriting and home price growth are helping keep delinquencies low. Institutional investors like insurance companies and private equity firms are providing stable capital, alongside traditional securitizations. Experts agree non-QM lending has matured, with increasing public awareness, stronger infrastructure, and wider investor participation positioning it for continued growth.

Senior fellows advocate for reducing GSE footprint in the U.S. mortgage market
April 30, 2025

In a recent Wall Street Journal commentary, Mr. John H. Cochrane and Mr. Amit Seru, two senior fellows at Stanford University’s Hoover Institution, argued for the urgency and necessity of expanding private market’s role in the U.S. mortgage market. According to the two Stanford fellows, Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) currently guarantee more than 60% of new mortgages. Compared to their 45% prior to the 2008 financial crisis, GSEs currently have a greater footprint than ever.

What have impeded a vibrant private market from emerging? First, GSEs have been relaxing their underwriting criteria to compete with private lenders. For example, Fannie Mae and Freddie Mac are now allowed to back mortgages up to $1.1 million, a market normally played by private lenders. Additionally, tighter regulation and scrutiny by the CFPB have moved more business away from the private sector. With the GSEs’ mortgage loan portfolio standing at $7.5 trillion, the government is again on the hook if home prices take a tumble. A large GSE footprint also limits market innovation.

Non-QM loans are among the most preferred asset classes in PIMCO’s private credit strategy
December 10, 2024

PIMCO, the nation’s top fixed income institutional investor, identified residential mortgage lending, particularly non-qualified (non-QM) loans, as one of a few investment areas in which it has strong conviction for its private credit strategy. According to PIMCO, residential mortgage market has experienced several compelling trends in recent years. The low loan-to-value (LTV) profile, tight loan underwriting standard, and home price tailwinds all have provided private market investors with strong credit fundamentals and attractive value.

As the US banking landscape has evolved since the GFC, banks are now focused on increasing long-term, stable profitability by reducing balance-sheet lending with high capital charges. This drives institutional investors such as PIMCO to look for attractive opportunities in asset-based financing. Since 2016, Non-QM loan market has experienced strong annual growth, according to the JP Morgan data. By 2022, the market size had soared to about $41 billion, and was near $28 billion in 2024 through September 9. The residential mortgage market is the largest component of PIMCO’s asset-based investment opportunity set.