Mortgage Payments Continued to Rise in October

The Mortgage Bankers Association (MBA) reported on Tuesday (11-27-22) 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 (WAS), homebuyer affordability continued its downward trend in October, as the national median payment applied for by applicants increased 3.7% to $2,012 from $1941 in September.

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 increased 2.7% to a reading of 167.9 in October, up from 163.6 in September. The index surpassed the previous high of 164.2 in May 2022. The index has jumped 36.0% in the first ten months of 2022 and is up 38.1% year-over-year (October 20210). For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment in October increased to $1,323, up from $1,271 in September.