US Mortgage Application Payments Unchanged in February

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 remained flat in February. The national medium payment applied for by applications remaining unchanged at $2,205.

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 increased 0.1% to 166.2 in February from 166.1 in January. Median earnings were up 5.0% compared to one year ago, and while payments increased 1.0%, the significant earnings growth means that the PAPI is down 3.8% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,506 in February from $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 decreased to $2,463 in February, down from $2,531 in January.

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

“Homebuyer affordability conditions remained unchanged in February as many homebuyers continue to weigh their options on entering the housing market amid economic uncertainty and slowly declining mortgage rates. While February’s data reflects little movement, we do expect that rising housing inventory, coupled with lower mortgage rates, will spur additional activity in the housing market.”