Back to Press

HousingWire – Non-QM lender Excelerate Capital flexing its wings in a new normal market

On today’s episode, Editor in Chief Sarah Wheeler talks with Senior Reporter Bill Conroy about how investors in the secondary market are reacting to rapid rate changes. The two also discuss the non-QM lenders expanding during this time and how the GSEs are offloading risk.
Orange County Real Estate and Mortgage

Thomas Yoon-led lender is bolstering its technology, adding staff and remains on track to conduct its first private label securitization this year.

Interest rates jumped by more than 2 percentage points over the first quarter of 2021. That bolt-like spike in rates put many mortgage lenders into crisis mode.

Lenders saw the value of agency loans made at lower rates — in the 3% range — in 2021 and early January 2022 drop precipitously over the course of the first quarter. That negatively affected liquidity options in both the loan-trading and securitization markets as higher-rate loans [above 5%] subsequently hit the market. The same rate-spike dynamics hit non-QM lenders as well, with rates for those loans rising a couple points over the period as well, to the 6% to 7% range.

Thomas Yoon, president and CEO of non-QM lender Excelerate Capital, added that the housing industry in late 2021 and early 2022 was at the tail end of a historic refinancing boom.

“And when the margins compressed and did so quickly [because of the spike in interest rates], everyone had to react immediately,” he said. “That caused industry layoffs and rightsizing, downsizing, whatever you want to call it. That always happens after a refi boom. But the kind of the unique piece of it this time was that interest rates have never risen as quickly as they went up in such a short period of time.”

– Thomas Yoon

The good news is that in the second quarter of 2022, the extreme rate volatility has abated. Both agree the industry is not completely out of the woods, given interest rates are still much higher than in 2021 and may inch up further in the months ahead as the Federal Reserve continues to fight inflation by raising its benchmark interest rate and shrinking its portfolio of mortgage-backed securities.

Posted on June 9, 2022, 11:21 am by Bill Conroy, Housing Wire.