Mortgage Payments Declined 0.1% in June

The Mortgage Bankers Association (MBA) reported on Thursday (7-27-23) 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 (WAS)—homebuyer affordability improved 0.1% in June. The national median payment applied for by applicants declined to $2,162 from $2,165 in May but up from $2,112 in April 2023.

An increase in the 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 0.1% to a reading of 177.2 in June, down from 177.4 in May but up from 172.4 in April. The MBA notes that while the Index declined in June, it still remains at an elevated level. Median earnings were up 5.7% compared to one year ago, while payments increased by 14.2%. The strong earnings growth means that the PAPI is up 8.1% year-over-year.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,459 in June from $1,462 in May.