Mortgage Application Payments Decline Further in September

On Thursday, the Mortgage Bankers Association (MBA) reported that 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—shows homebuyer affordability improved in September. The national medium payment applied for by applicants declining from $2,057 in August to $2,041 in September.

An increase in MBA’s 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 decreased 0.8% to a reading of 157.9 in September, down from 159.2 in August. Year-over-year, median earnings were up 4.2%, and while payments decreased 5.3%, the moderate earnings growth means that the PAPI is down 9.1% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased from $1,388 in August to $1,369 in September.

The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey decreased from $2,362 in August to $2,333 in September.