US Mortgage Application Payment Index Falls in October

On Thursday, the Mortgage Bankers Association (MBA) reported that homebuyer affordability improved in October, with the national median payment applied for by purchase applicants decreasing to $2,039 from $2,067 in September, 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 1.6% to a reading of 152.0 in October, compared with 155.0 in September. Year-over-year, median earnings rose (based on pre-shutdown August data), while payments decreased 4.2%. With stronger earnings growth, the PAPI was down 5.5% from a year earlier, indicating improved affordability.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment was $1,402 in October, compared with $1,418 in September.

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

“Affordability conditions have now improved for the fifth consecutive month because of lower mortgage rates, higher household earnings, and flattening home-price growth. The median purchase application payment amount in October was $88 lower than one year ago. Affordability is improving—PAPI is at its lowest level since March 2022—and is likely to continue to as mortgage rates hold to around 6% and more supply comes onto the market.”