Mortgage Application Payments Push Higher in October

The Mortgage Bankers Association (MBA) reported on Thursday (11-30-23) 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 applications rose from $2,155 in September to $2,199 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 rose 1.2% to a reading of 175.9 in October, up from a reading of 173.8 in September. With this increase, the PAPI is just 1.5 points away from its record high, which was set in May. Median earnings were up 3.9% year-over-year, and while payments increased 9.3%, the strong earnings growth means that the PAPI is up 5.2% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased from $1,437 in September to $1,466 in October.

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 $2,609 in September to $2,672 in October.