Homebuyer affordability continued to erode in April, as the national median mortgage payment applied for by purchase applicants increased to $2,256, up from $2,201 in March and up from $1,750 in April 2023, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI).
“Homebuyer affordability conditions declined further as mortgage rates remained above 7 percent in April, sidelining many prospective buyers from entering the housing market,” explains Edward Seiler, associate vice president, housing economics, and execuive director, Research Institute for Housing America. “In addition to lower mortgage rates, more housing inventory is desperately needed in markets throughout the country this summer to alleviate these tough affordability conditions.”
An increase in the index is indicative of declining borrower affordability conditions. It 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 is indicative of improving borrower affordability conditions and occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.
In April the index increased 1.5% to a score of 176.8, compared with a score of 174.2 in March.
Median earnings were up 4.6% compared to one year ago, and while payments increased 6.8%.
The strong earnings growth means that the PAPI is up 2.1% on an annual basis.
For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,537 in April from $1,488 in March.
Looking just at applications for new home purchases, the median mortgage payment for purchase mortgages increased to $2,604 in April, up from $2,556 in March.
The top five states with the highest PAPI were: Idaho (267.2), Nevada (264.9), Arizona (236.4), Florida (227.4), and Rhode Island (224.8).
The top five states with the lowest PAPI were: Alaska (131.6), Louisiana (134.1), Connecticut (134.2), New York (139.1), and Washington, D.C. (141.2).
Photo: Grahame Jenkins