The boom of the non-agency market is slowly coming to a lull as less potential for profit pulls investors out of the market.

According to a report from Amherst Securities Group, the non-agency market has significantly dwindled and fell to $782.4 billion in unpaid balance, and 3.5 million in loans outstanding.

The balance contracted by 1.5% month-over-month and 14.4% year-over-year.

This is compared to February 2013 when the market had $914.1 billion in unpaid balance and 3.9 million in loan count.

Although year-over-year the cumulative total return was 9.33% and outperformed all other sectors, the non-agency RMBS surge started to shrink in the latest quarter and dropped .02% in February, and on a month-over-month basis, it underperformed corporate.  However, it did gain .37% in total return, and subprime performed better than others.

And Amherst is not alone in its assertions.

Greg Reiter, managing director and head of RMBS Research with Wells Fargo Securities, noted that the non-agency RMBS market activity remained sluggish this week, with supply and trade volume levels on the lower side again.  

“Weekly trade volume was about $6.3 billion, and BWIC supply was about $2.1 billion. Credit Suisse closed its first prime jumbo deal of the year, CSMC 2014-SAF1, bringing the 2014 new issuance amount to $635 million. Year to date, 2014 new issuance is down about $1.4 billion compared to last year,” he stated. BWIC deals are the remaing legacy of Dutch insurer ING Group excursion into American private mortgage bonds. That last such deal is expected Thursday.

In its latest earnings report from Redwood Trust — which does non-agency RMBS — it recorded that its net income for the fourth quarter of 2013 rose to $25 million from $22 million in the third quarter of 2013.

But they expect an even better 2014.

Once the second half of the year rolls around, Redwood Trust (RWT) will like start issuing again as the market starts to pick up, sources said. Last year, the real estate investment trust issued roughly one bond deal a month.