US Mortgage Application Payments Decrease in March

On Thursday, the Mortgage Bankers Association (MBA) reported 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, homebuyer affordability improved in March. The national median payment applied for by purchase applicants fell from $2,205 in February to $2,173 in March.

An increase in MBA’s 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 1.4% to a reading of 164.1 in March, down from 166.5 in February. Median earnings were up 4.8% compared to one year ago, and while payments decreased 1.3%, the significant earnings growth means that the PAPI is down 5.8% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,499 in March, down from $1,506 in February.

The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey decreased to $2,288 in March, down from $2,463 in February.

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

“Homebuyer affordability conditions improved slightly in March as lower mortgage rates spurred renewed activity in the housing market. Despite improving conditions in March, the outlook in the upcoming months is cloudier. Ongoing affordability concerns, declining consumer confidence, and volatility in the financial markets could all put downward pressure on homebuyer demand.”