The Mortgage Bankers Association (MBA) reported on Thursday (12-22-22) 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 improved in November. The national median payment applied for by applicants dropped 1.8% to $1,977 from $2,012 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 decreased 1.8% to a reading of 164.7 in November, down from a reading of 167.6 in October. However, the November reading is still the second-highest level dating back to July 2009. Compared to the November 2021 reading of 122.6, the index has climbed 33.4% in the first eleven months of 2022. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased in November to $1,289, down from $1,323 in October.
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