KBRA releases its 2026 U.S. RMBS Sector Outlook, which provides market and performance themes as of year-to-date (YTD) 2025, as well as issuance volume trends and forecasts for 2026, collateral performance trends, and rating surveillance outcomes. In addition, we cover the RMBS 2.0 spread environment at pricing as well as other themes to watch in 2026.

Some key takeaways from the report include the following:

• Themes to Watch: In 2026, mortgage rates are expected to remain near 6.0%-6.5% as inflation remains sticky and unemployment edges higher. Home prices are likely to stay flat overall, but with wide regional differences. State-level regulatory activity may rise amid slow federal reform.
• Issuance Volumes: RMBS 2.0 issuance—including prime, non-prime, credit risk transfer (CRT), and second liens—is projected to reach $160 billion in 2026, up 15% from KBRA’s $138 billion estimate for 2025, reflecting broad-based growth driven by tighter spreads, greater liquidity, and investor demand.
• Spreads: Tightening has continued across all RMBS sectors since 2022 highs, reflecting stronger investor sentiment, better liquidity, and normalized risk premiums. Favorable market conditions are expected to keep spreads tight-to-stable through 2026.
• Credit Performance: Delinquencies are rising modestly across all sectors, especially in non-prime, as credit performance continues to normalize from post-pandemic lows. However, the market appears well positioned to absorb this softening without significant dislocation.
• Surveillance Activity: KBRA’s surveillance year-to-date (YTD) through October 2025 reflects strong credit performance and minimal rating volatility, with 91.9% affirmations, 8.1% upgrades, and 0.01% downgrades across all deal types.

Click here to view the report.

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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