Mortgage Application Payments Trend Lower in November

The Mortgage Bankers Association (MBA) reported on Thursday (12-21-23) 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 its Weekly Applications Survey, homebuyer affordability improved in November. The national medium payment applied for by applications fell from $2,199 in October to $2,137 in November.

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 fell 2.8% to a reading of 170.9 in November, down from 175.9 in October. With this decrease, the PAPI is now at the lowest level since February. Median earning were up 3.9% year-over-year, and while payments increased 8.1%, the strong earnings growth means that the PAPI is up 4.0% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased from $1,466 in October to $1425 in November.

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 $2,672 in October to $2,597 in November.