The Mortgage Bankers Association (MBA) reported on Thursday (10-27-22) that homebuyer affordability decreased by 5.5% in September, after declining the three previous consecutive months. The national median payment applied for by applicants moved from $1,839 in August to $1,941 in September.
This is according to the MBA’s Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time (relative to income) using data from its Weekly Applications Survey (WAS). 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 increased 5.5% to a reading of 163.6 in September (up from 155.5 in August). The September increase reverses three consecutive months of declines from a high of 164.2 in May 2022. Compared to September 2021, when the reading was at 117.6, the index has increased 32.5% in the first nine months of 2022. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased in September to $1,271 (up from $1210 in August).
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