US Mortgage Application Payments Rise in January

On Thursday, the Mortgage Bankers Association (MBA) reported that its Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time (relative to income), showed a decline in homebuyer affordability in January. The national median payment applied for by homebuyers increased from $2,127 in December to $2,205 in January.

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 increased 3.1% to a reading of 165.9 in January, up from December’s reading of 160.8. Year-over-year, median earnings were up 5.2%; and while payments increased 3.3%, the significant earnings growth means that the PAPI is down 1.8% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased from $1,456 in December to $1,519 in January.

The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased from $2,500 in December to $2,531 in January.

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

“Homebuyer affordability conditions declined further in January as volatile mortgage rates and high home prices continue to impact many prospective buyers’ purchasing power. Even with persisting affordability challenges, MBA is forecasting for a small increase in purchase originations in 2025, with activity increasing 16% to $2.1 trillion.”