Mortgage Payments Increase for Third Consecutive Month in March

The Mortgage Bankers Association (MBA) reported on Thursday (4-27-23) 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—homebuyer affordability declined in March. The national median payment applied for by applicants increased 1.6% to $2,093 from $2,061 in February.

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 1.6% to a reading of 171.5 in March, up from February’s reading of 168.9. The MBA notes that with the March increase, the PAPI hit another new record high. Compared to the March 2022 reading of 147.1, the index is up 13.7%.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,411 in March, up from $1,391 in February.