Commentary

U.S. RMBS 2025 Midyear Outlook: Volume Up and Credit Steady in H1; Can H2 Continue the Trend?

RMBS

Summary

The U.S. residential mortgage-backed securities (RMBS) market finished the first half of 2025 with credit performance in check and sector issuance volume passing H1 2024's total as most RMBS collateral types saw supply gains. Heading into the second half of the year, possibly disruptive political influences still loom and the economic landscape looks to be a little less robust, but the near-term environment for mortgage, housing, and RMBS will likely still include continued modest home sales, some home price appreciation, and mortgage rates remaining in the 6%-7% range, absent any significant economic shifts.

Conforming mortgage originations may continue to track not much better than last year, while non-Qualified Mortgages and expanded products like the "new-age" home equity variations should continue to see gains in outstandings, leading to commensurately more RMBS issuance. Meanwhile, delinquency levels will likely stay contained within normal projected ranges, and credit losses are anticipated to remain minimal, though the first post-pandemic recession has yet to be seen.

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