The Mortgage Bankers Association (MBA) reported on Thursday (7-28-22) 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 was mostly unchanged in June. The national median payment applied for by applicants was down slightly to $1,893 from $1,897 in May.
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 0.2% to a reading of 163.9 in June, down from May’s reading of 164.2, meaning payments on new mortgages take up a smaller share of a typical person’s income. Compared to June 2021 (119.3), the index has jumped 37.4%. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment was flat at $1,241.
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Despite Higher Rates, Mortgage Application Payments Hold Steady in June