US Mortgage Application Payment Index Falls in December

On Thursday, the Mortgage Bankers Association (MBA) reported that homebuyer affordability improved in December 2025, with the national median payment applied for by purchase applicants decreasing to $2,025 from $2,034 in November, according to its Purchase Applications Payment Index (PAPI).

The PAPI measures how new monthly mortgage payments vary over time relative to income, using data from MBA’s Weekly Applications Survey. An increase in the index signals worsening borrower affordability as the mortgage payment-to-income ratio (PIR) rises, while a decrease indicates improving affordability conditions.

The national PAPI fell 0.5% to a reading of 148.8 in December, compared with 149.5 in November. Year-over-year, median earnings rose 2.9%, while payments declined 4.8%. As a result, the PAPI was down 7.5% from a year earlier, indicating improved affordability.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment was $1,413 in December, compared with $1,409 in November.

Commenting on the report, MBA Associate Vice President of Housing Economics and Executive Director of the Research Institute for Housing America Edward Seiler said,

“Housing affordability conditions improved for the seventh consecutive month to close out 2025 because of lower mortgage rates and steady household earnings growth. MBA expects that moderating home-price appreciation, combined with even lower mortgage rates, will continue to gradually ease affordability constraints and support increased housing market activity.”