Mortgage Application Payments Continue to Trek Higher in April

On Friday, the Mortgage Bankers Association (MBA) reported that according to its Purchase Applications Payment Index (PAPI)—which measures how new monthly mortgage payments vary across time, relative to income, using data from MBA’s Weekly Applications Survey—homebuyer affordability declined further in April.

The national medium payment applied for by purchase applicants increased slightly, from $2,201 in March to $2,256 in April.

An increase in the PAPI—indicative of declining borrower affordability conditions—means that the mortgage payment to income ratio (PIR) is higher due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings. A decrease in the PAPI—indicative of improving borrower affordability conditions—occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.

The national PAPI rose 1.5% to a reading of 176.8 in April, up from 174.2 in March. Median earnings were up 4.6% year-over-year; and while payments increased 6.8%, the strong earnings growth means that the PAPI is up 2.1% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,537—up from $1,488 in March.

The Builder’s Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased from $2,556 in March to $2,556 in April.