Home equity investment deals propped up issuance of home equity loan securitizations in the fourth quarter. For the full year, HEL securitizations nearly doubled from 2024 levels. (Includes three data tables.)
Home equity investment securitization deal sizes increased with issuance in November and activity is expected to remain elevated in 2026 thanks to strong demand from investors.
Closed-end second liens and home equity lines of credit flowed into securitizations during the third quarter of 2025 after a brief slowdown in the second quarter. Nine months into the year, issuance was up more than 70% on an annual basis. (Includes three data tables.)
Non-agency MBS issuance is up sharply this year and is expected to rise again in 2026. Delinquencies on the loans are increasing but investors are counting on cushions from home equity to help prevent losses.
The securitization of vehicle loans and financing for a range of businesses powered an all-time record of $107.7 billion of ABS issuance during the third quarter. Carmakers dominated the issuer ranking. (Includes three data tables.)
Santander Bank is issuing a securitization of closed-end second liens sourced from Pennymac. Also, an affiliate of PIMCO is offering a securitization of seasoned HELOCs.
Revisions to disclosure requirements could prompt the issuance of publicly-registered non-agency MBS, which could eventually lead to additional demand from investors.
Researchers tracked ratings and defaults on non-agency MBS between 2013 and 2022, finding that Morningstar’s ratings were more conservative than ratings from the big three firms. However, Morningstar’s ratings produced more “false alarms” about potential defaults than the big firms.
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