Press Release|RMBS
KBRA Releases Research – 2027 U.S. RMBS Sector Outlook: Record Issuance and Resilient Credit
10 Nov 2026 | New York
KBRA releases its outlook for the U.S. residential mortgage-backed securities (RMBS) market, examining the key trends expected to shape issuance, credit performance, and market conditions in 2027. The report provides issuance forecasts for RMBS 2.0 and rated esoteric RMBS, assesses evolving collateral performance and spread trends, and reviews rating surveillance activity through October 2026.
Some key takeaways from the report include the following:
- Housing Outlook: National home price appreciation is projected at 0%-1% in 2027, with elevated mortgage rates and rising housing costs continuing to pressure affordability, while regional performance remains differentiated. Still, sellers have resisted downward pressure as forced liquidations have remained low, partly due to employment remaining supportive of loan performance.
- Market Evolution: Elevated mortgage rates continue to constrain first-lien refinancing and remain supportive of home equity extraction via second liens. Non-qualified mortgage (NQM) continues to dominate issuance; securitizations of seasoned collateral will increase via loans from called NQM transactions and as issuers explore NQM subordinate bond and residual repacking.
- Issuance Volumes: RMBS 2.0 issuance is estimated to increase 35% from 2025 to a post-global financial crisis (GFC) record of $220 billion in 2026, before rising another 12% to $246 billion in 2027. Prime and non-prime issuance are expected to increase 12.7% and 13.6%, respectively, while second-lien issuance is projected to rise 9.1%.
- Credit Performance: Prime delinquencies remain low and non-prime has improved year-over-year (YoY), although 60+ day delinquency rates vary by vintage, with the 2023 prime and 2024 non-prime cohorts showing weaker performance at comparable seasoning. Second liens show pockets of softening. Prepayment rates are higher YoY, although they have declined for several months.
- Surveillance Activity: Through October 31, 2026, 99.99% of KBRA U.S. RMBS surveillance rating actions were affirmations or upgrades. Rating stability is expected to persist through 2027, supported by broadly stable credit performance.
Click here to view the report.