US Mortgage Application Payments Edge Lower in December

On Thursday, the Mortgage Bankers Association (MBA) reported that homebuyer affordability improved slightly in December, according to its Purchase Applications Payment Index (PAPI). The index, which tracks changes in new monthly mortgage payments (relative to income) using data from MBA’s Weekly Applications Survey, showed that the national median payment requested by applicants decreased from $2,133 in November to $2,127 in December.

An increase in the 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 declined 0.3% to a reading of 160.8 in December, down from 161.3 in November. Median earnings were up 4.1% compared to one year ago, and while payments increased 3.5%, the significant earnings growth meant that the PAPI is down 0.6% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased from $1,436 in November to $1,446 in December.

The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased to $2,500 in December, up from $2,481 in November.

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 were essentially flat in December, the result of somewhat volatile mortgage rate movements and moderating home-price growth. 2024 was a sluggish year for home sales because of weak affordability conditions throughout the country. MBA expects 2025 conditions will improve as housing supply increases, giving prospective buyers more options and putting less pressure on their budgets.”