New Mortgage Payments Declined for Third Straight Month in August

The Mortgage Bankers Association (MBA) reported on Thursday (9-22-22) 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 improved for the third consecutive month in August. The national median payment applied for by applicants was down to $1,839 from $1,844 in July.

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 decreased 0.3% to a reading of 157.9 in August, down from July’s reading of 158.3, meaning payments on new mortgages take up a smaller share of a typical person’s income. Compared to August 2021 (115.7), the index has jumped 36.5%. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment was unchanged between July and August of 2022, remaining at $1,210.


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