Mortgage Application Payments Trek Higher in January

The Mortgage Bankers Association (MBA) reported (2-29-24) 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 January. The national median payment applied for by purchase applicants increased from $2,055 in December 2023 to $2,134 in January.

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 3.8% to a reading of 166.3 in January, up from 161.8 in December 2023. Median earnings were up 5.2% year-over-year, and while payments increased 8.6%, the strong earnings growth means that the PAPI is up 3.3% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,438 in January, up from $1,375 in December 2023.

The Builder’s Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey decreased from $2,541 in December 2023 to $2,501 in January.