Mortgage Payments Increase in January, Following Two Months of Declines
The Mortgage Bankers Association (MBA) reported on Thursday (2-23-23) that according to its Purchase Applications Payment Index (PAPI), homebuyer affordability declined in January, as the national median payment applied for by applicants increased 2.3% to $1,964 from $1,920 in December 2022. The PAPI measures how new monthly mortgage payments vary across time (relative to income), using data from MBA’s Weekly Applications Survey.
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 0.9% to a reading of 160.9 in January, up from a reading of 159.5 in December. The MBA notes that even though there was an increase in January, the current reading is down 6.3 points from the series high in October 2022. Year-over-year, the index is up 21.2%. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,322 in January from $1,279 in December.
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