These loans are classified as QMs under the rule.16 The small proportion of mortgages originated at present outside of these programs, for the most part, are being underwritten to tight standards consistent with the QM definition. As lender risk appetite increases and private capital returns to the mortgage market, a larger non-QM market should start to develop.
Nevertheless, we must not be complacent and it is of utmost importance for all actors to monitor and to ensure the soundness of the domestic financial system throughout this shock. More broadly, while market attention has focussed on banks in recent months, potential vulnerabilities in the non-bank sector have not gone away.