Mortgage Application Payments Jump in October

On Tuesday, 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 October. The national medium payment applied for by applicants increased from $2,041 in September to $2,127 in October

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 climbed 2.8% to a reading of 162.3 in October, up from 157.9 in September. Year-over-year, median earnings were up 3.2%, and while payments decreased 3.3%, the moderate earnings growth means that the PAPI is down 6.3% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,431 in October, up from $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 increased to $2,470 in October from $2,333 in September.

Commenting on the report, MBA Associate Vice President of Housing Economics, and Executive Director, Research Institute for Housing America, Edward Seiler said:

“Homebuyer affordability conditions declined notably in October as rapidly rising mortgage rates pushed the national median mortgage payment up $86 from September. With the increase in mortgage rates, the PAPI reached its highest level since July, and we expect weaker homebuyer affordability to remain a hurdle for prospective buyers in the final months of 2024.”