Prime jumbo mortgage and other non-qualified mortgage (NQM) delinquencies have jumped year-over-year, driven primarily by the 2023 vintage, according to February remittance data recently reported by Fitch Ratings.
For now, however, the changes represent a reversion to the norm rather than a significant concern.
The recent uptick in delinquencies brings it more in line with our expectations.
On the prime jumbo front, delinquencies of 30 days or more rose 1.09%, or 22 basis points, while delinquencies of 90 days or more increased 0.49%, or 15 bps. The broader NQM sector, meanwhile, saw a significantly higher jump in delinquencies, with the 30-plus increasing to 7.26%, up 118 bps, and the 90-plus to 3.61%, up 81 bps.
"These increases indicated continued collateral deterioration across all NQM vintages," Fitch said in its recently published U.S. RMBS Performance Monitor-Q1 2026.
The performance of NQM is important, noted Sam Reid, partner and co-portfolio manager of River Canyon Fund Management, because "it has exhibited strong credit performance for more than a decade and is very liquid in the secondary market."
More volume, more problems
Court Lake, senior director in Fitch's structured finance division, noted that NQM has been a large and growing asset class in recent years. That growth, however, requires significantly more new collateral from non-prime borrowers, which resulted in higher delinquency rates.
Originators have already tightened credit standards for later vintages and we are seeing a more shallow delinquency ramp for loans originated in 2025.
"For us, that higher delinquency rate is notable," Lake said. "NQM has outperformed expectations for a number of years, and the recent uptick in delinquencies brings it more in line with our expectations."
He added that Fitch's average expected default rate for the single-B rating stress case is about 17%, "So we're still well beneath that."
Fitch reported that the 2023 mortgage vintage's delinquency rates exceed more recently originated mortgages, but not by much. The recent remittance data shows the 2023 vintage's 30-plus and 90-plus delinquency rates rested at 10.95% and 5.98%, respectively, increasing year-over-year by 2.55% and 1.73%. That compares to 2024 and 2025 vintages that show 90-plus delinquencies of 3.71% and 1.18%, up 2.31% and 1.18%, respectively.
"Originators have already tightened credit standards for later vintages and we are seeing a more shallow delinquency ramp for loans originated in 2025," Reid said.
Fitch notes that "similar deterioration trends in newer vintages highlight a sector-side performance shift, relative to earlier vintages."
In earlier research, Fitch warned about the likelihood of higher delinquency rates in the 2023 loan vintage, because of expanded underwriting guidelines that resulted in lower FICO scores, higher debt-to-income and combined loan-to-value (LTV) ratios, and a higher percentage of self-employed borrowers.
Managing RMBS delinquencies
In terms of RMBS, the increase in delinquencies in the 2023 vintage has resulted in more modifications of jumbo prime loans and liquidations among NQMs. However, NQM RMBS typically carry significant excess spread.
"Even though we've seen some actual losses, they have been absorbed by excess spread and haven't impacted bond holders," Lake said.
Recently increased RMBS delinquency rates represent more of a return to the norm, instead of a major cause for concern, Lake emphasized, adding that Fitch continues to focus on movements particularly in the 90 day-plus rate, since the 30-day rate tends to be more volatile.
Fitch also tracks the cure rates, which reflect the percentage of defaulted loans for which borrowers resume current payments, and roll rates, the percentage of loans that move from one stage of delinquency to a worse one, such as from 30 to 60 days late.
"Cure rates have decreased around 4%-5% for the 2022-2024 vintages, while roll rates hover between 1.5% and 2.5%, indicating underlying delinquency behavior remains relatively stable with minor deterioration," Fitch reported.
