Non-Agency MBS Share Hits 12.2% as Private-Label Securitization Jumps 44%

Non-Agency MBS Share Reaches 12.2% as Private-Label Securitization Jumps 44%

Executive Summary

• First-lien private-label securitization increased 44% year over year, according to the Urban Institute’s August 2026 housing finance chartbook.

• Non-agency securities accounted for 12.2% of residential mortgage-backed securities issuance, while monthly non-agency securitization reached $20.8 billion.

• Non-QM mortgages are driving much of the expansion, but agency-backed mortgages still overwhelmingly dominate the U.S. secondary market.

Private capital is taking a larger role in the U.S. mortgage market as non-agency securitization grows at a pace not seen in years.

First-lien private-label securities, or PLS, securitization increased 44% from a year earlier, according to the Urban Institute’s Housing Finance Policy Center chartbook released Aug. 31. The report also put the non-agency share of residential mortgage-backed securities issuance at 12.2% and monthly non-agency securitization volume at $20.8 billion.

The figures show how a secondary market long dominated by Fannie Mae, Freddie Mac and Ginnie Mae is becoming more active outside the traditional agency channels.

Agency MBS still account for roughly 88% of issuance based on Urban Institute’s 12.2% non-agency figure, so private-label deals remain a minority of the overall market. But the growth is significant for lenders originating non-QM, jumbo, investor and other loans that do not fit neatly into traditional agency execution.

Non-QM is leading the private-label expansion

One of the biggest sources of private-label growth is non-qualified mortgage lending.

Gross non-QM securitization issuance reached approximately $82 billion by the end of August, already surpassing the $80 billion issued during all of 2025, according to Bank of America Securities research reported by National Mortgage News. Bank of America estimates issuance could reach $100 billion for the full year.

Non-QM represented almost 44% of roughly $187 billion in private-label residential MBS issuance so far in 2026, according to the same research.

The expansion is not occurring equally across every segment. Bank of America found non-QM was the only major private-label RMBS category it tracks that had already exceeded the prior year’s volume, while categories including jumbo, single-family rental, residential transition and reperforming or nonperforming loan securitizations remained below their 2025 totals. Home-equity and agency-eligible investor-loan issuance had approximately matched last year’s levels.

That composition matters because rising private-label issuance should not be interpreted simply as borrowers moving en masse away from conventional mortgages. Much of the growth reflects specialized lending products and investor demand for mortgage credit that sits outside standard agency channels.

Mortgage companies are building around securitization

Recent company filings show lenders and mortgage investors increasingly treating private-label securitization as a strategic funding and investment channel.

PennyMac Mortgage Investment Trust completed six private-label securitizations totaling about $2.18 billion during the second quarter, up from four transactions totaling $1.39 billion a year earlier. The company also acquired $2.2 billion of loans from PennyMac Financial Services for inclusion in private-label securitizations, a 123% increase from the second quarter of 2025.

PennyMac said it stopped acquiring agency-eligible conventional loans through its correspondent arrangement beginning in June while continuing to acquire all non-agency volume. Management described the shift as a way to direct more capital toward higher-yielding credit-sensitive investments generated through private-label securitization.

Redwood Trust is also expanding through non-QM. Its Aspire mortgage platform completed two non-QM securitizations during the second quarter, while its non-QM correspondent lock volume reached $2.1 billion. Redwood said its expanded debt-service coverage ratio, or DSCR, activity increased 31% quarter over quarter.

Those examples illustrate why securitization matters beyond Wall Street. A deeper private market can give lenders another outlet for mortgages that do not meet agency requirements, potentially allowing originators to recycle capital and continue producing specialized loans.

Agency lending still dominates

The rise of private-label securities does not mean Fannie Mae, Freddie Mac and Ginnie Mae are losing their central position in mortgage finance.

SIFMA reported $1.26 trillion of total U.S. MBS issuance through July 2026, up 21.8% from the same period a year earlier.

United Wholesale Mortgage provides one example of how heavily major originators still rely on agency execution. UWM said 93% of the mortgages it originated during both the second quarter and first half of 2026 were sold to Fannie Mae or Freddie Mac or transferred into Ginnie Mae pools. The remainder primarily consisted of jumbo, construction, non-QM and home-equity products sold through other channels.

UWM’s filing also shows the distinction between originating non-agency loans and issuing private-label securities. The company has historically conducted its own private-label securitizations but reported that it has not completed one since 2021.

In other words, a lender can participate in the non-agency market without necessarily sponsoring its own securitization.

How high is the non-agency share?

Urban Institute characterized the current non-agency share as its highest level since the Great Recession in its August report. Its April 2026 chartbook, however, reported a 12.6% non-agency securitization share and also described that figure as the highest since the Great Recession.

That makes the precise “record” level dependent on the reporting period or subsequent data revisions. The broader conclusion is clearer: private-label issuance in 2026 is operating around its highest share of the residential MBS market since before the post-financial-crisis era of agency dominance became entrenched.

The longer-term change is also visible in first-lien mortgage funding. Urban Institute reported earlier this year that the PLS share of securitized first-lien originations increased from 2.4% in 2021 to 6% in 2025. The latest chartbook now shows first-lien PLS securitization volume increasing another 44% year over year.

What it means for mortgage lenders

For lenders, the resurgence of private securitization expands the number of potential outlets for loans that fall outside agency guidelines.

That can support products such as non-QM loans using alternative income documentation, DSCR loans for real estate investors and jumbo mortgages above conforming loan limits. But private-label markets also carry different liquidity, credit and investor-demand risks than the agency market.

Those risks became particularly visible in 2020, when non-QM secondary-market liquidity deteriorated sharply before later recovering. Market participants are therefore watching not only issuance volume but also credit spreads, delinquency performance and investor appetite as the sector grows.

For now, the 2026 data points to a mortgage market with a meaningfully larger private-capital component — not a replacement for agency finance, but an increasingly important complement to it.

The next test will be whether non-QM and other private-label issuance can maintain their current pace if credit conditions weaken or investor spreads widen.