US Mortgage Application Payment Index Rises in March

On Thursday, the Mortgage Bankers Association (MBA) reported that homebuyer affordability worsened in March, with the national median payment applied for by purchase applicants increasing to $2,131 from $2,061 in February, according to its Purchase Applications Payment Index (PAPI).

The PAPI increased 3.4% to a reading of 154.9 in March, compared with 149.8 in February. However, year-over-year, median earnings rose 3.9%, while payments declined 2.0%. With stronger earnings growth, the PAPI was down 5.6% from a year earlier, indicating improved affordability.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment was $1,479 in March, compared with $1,436 in February.

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 conditions declined in March, as rising mortgage rates and higher loan amounts continued to stretch household budgets. The national PAPI increased by 4.9 points, reflecting a broad-based decline in affordability across 44 states. The combination of a 26-basis-point increase in rates, and a rise in the median purchase application amount to $335,000, reflects the ongoing pressure facing prospective buyers. Looking ahead, while these headwinds may temper demand in the near term, improvements in housing supply and moderating home-price growth could help restore some stability to the housing market.”