Mortgage Payments Increase for Second Consecutive Month in February

The Mortgage Bankers Association (MBA) reported on Thursday (3-23-23) 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 declined in February, as the national median payment applied for by applicants increased 4.9% to $2,061. This is up from $1,964 in January.

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 rose 4.9% to a reading of 169.7 in February, up from January’s reading of 161.7. The MBA notes that with the February increase, the PAPI hit a new record high compared to its previous series high in October 2022 at 167.2. Compared to February 2022’s reading of 143.7, the index is up 18.1%.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased in February to $1,391, up from January’s $1,322.