The national median mortgage payment was $2,199 in October, an increase of $44, or 1.2%, from September and up $143, or 9.3%, from October 2022, according to the Mortgage Bankers Association’s Purchase Applications Payment Index (PAPI).
The index measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey (WAS). As such, it is an indicator of homebuyer affordability.
“Homebuyer affordability conditions declined further in October, with the jump in mortgage rates during the month dissuading would-be buyers from entering the housing market,” says Edward Seiler, associate vice president, housing economics, and executive director, Research Institute for Housing America, in a statement. “MBA expects affordability conditions to remain challenging to close out 2023 before a slight improvement by early next year.”
Median earnings were up 3.9% compared to one year ago and while payments increased 9.3%.
The strong earnings growth means that the PAPI is up 5.2% on an annual basis. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,466 in October from $1,437 in September.
Looking at mortgage payments for only new home purchases, the Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased from $2,640 in September to $2,672 in October.
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 top five states with the highest PAPI in October included Nevada, Idaho, Arizona, California and Florida.
The top five states with the lowest PAPI were Louisiana, New York, Connecticut, Oklahoma and West Virginia.
Photo: Phil Hearing