US Mortgage Application Payment Index Falls in July

On Thursday, the Mortgage Bankers Association (MBA) reported that homebuyer affordability improved in July, with the national median payment applied for by purchase applicants decreasing to $2,175 from $2,191 in June, 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 1.3% to a reading of 155.8 in July, compared with 157.9 in June. Year-over-year, median earnings rose 3.6%, while payments increased 2.2%. With stronger earnings growth, the PAPI was down 1.3% from a year earlier, indicating improved affordability.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment was $1,512 in July, compared with $1,522 in June.

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

“Homebuyer affordability improved in July, as a decline in the median loan amount offset a modest increase in mortgage rates, bringing the typical mortgage payment down to $2,175. Affordability also improved on an annual basis, as earnings growth continued to outpace the increase in mortgage payments. Looking ahead, we expect affordability conditions to remain closely tied to the path of mortgage rates and home-price growth. Mortgage rates have increased in recent weeks, but any sustained reversal, combined with moderating home-price growth and rising inventory, would provide additional relief for prospective buyers through the remainder of 2026.”