Non-agency MBS Weekly: 2nd Lien/HELOC Update: 2 good 2 pass

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Non-agency MBS Weekly: 2nd Lien/HELOC Update: 2 good 2 pass

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Non-agency MBS Weekly

2nd Lien/HELOC Update: 2 good 2 pass

Market Overview 24 July 2026

Issuance for the week was around $3bn, YTD at $145bn. Spreads for AAA NQM and Securitized Products Strategy

HELOC/CES are at 120bps, with Jumbo PT 137. We see attractive rel-val in Floater United States

spreads with 6 and 6.5cap Jumbo at 165 and 135, and HELOC Floaters at 130.

Pratik K. Gupta

2nd Liens Update CLO/MBSBofAS Strategist

+1 646 855 9146

Second lien and HELOC securitizations are at $24bn YTD, the highest year in post GFC pratik.gupta@bofa.com

record, and already close to surpassing $29bn last year—the second highest year. We Chris Flanagan

estimate around $41bn gross issuance for 2026 total. FI/MBS/CLO Strategist

BofAS

+1 646 855 6119

2nd Liens are not just second best: 2nd lien new issue AAAs are now priced at 120 christopher.flanagan@bofa.com

spread same as that of Non-QM. But middle of the stack between AA-BBB, HELOC/CES Jeana Curro

still see a notable spread pickup vs Non-QM. 2nd Liens have significantly less MBS Strategist

delinquencies than Non-QM deals of the same vintage. Additionally, the HELOC/CES jeana.curro@bofa.com

loan would still keep the combined LTV at sub 75%. Andy Fan

CLO/MBS Strategist

We think CES/HELOCs can be preferable vs Non-QM AAAs and we prefer deals which BofAS +1 646 855 9145

focus on full-doc conventional borrowers. andy.fan3@bofa.com

Akash Bhairav Gupta

Origination Characteristics: Home equity mortgage products (HELOC and second lien) MBS/CLO Strategist

mortgage origination is currently dominated by banks and credit unions, although BofAS +1 646 855 7717

nonbank volume has also shown an observable pick up in recent years. akashbhairav.gupta@bofa.com

Ge Chu, CFA