Mortgage Application Payments Inch Higher in March

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 in March. The national medium payment applied for by purchase applicants increased slightly from $2,184 in February to $2,201 in March.

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 rose 0.8% to a reading of 174.2 in March, up from February’s reading of 172.8. Median earnings were up 3.5% year-over-year, and while payments increased 5.2%, the strong earnings growth means that the PAPI is up 1.6% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,488 in March, up from $1,473 in February.

The Builder’s Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey (BAS) increased from $2,534 in February to $2,556 in March.