MBA: Homebuyer Affordability Declined in February


The national median payment applied for by purchase applicants increased to $2,184 in February, up 2.4% from $2,134 in January, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI).

The index measures homebuyer affordability by tracking how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey. 

“Homebuyer affordability conditions declined further in February as recent economic data on jobs and inflation continue to keep mortgage rates elevated to around 7 percent,” says Edward Seiler, associate vice president, housing economics, MBA, and executive director, Research Institute for Housing America, in a statement. “Challenging affordability conditions and low housing supply are keeping some prospective homebuyers on the sidelines this spring. The eventual, expected decline in rates in the coming months will hopefully spur new activity in the housing market.”

An increase in PAPI – indicative of declining borrower affordability conditions – means that the mortgage payment to income ratio 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.

In February, the national PAPI increased 2.4% to a score of 170.7, up from 166.8 in January.

Median earnings were up 4.8% compared to one year ago, and while payments increased 6.0%, the strong earnings growth means that the PAPI is up 1.1% on an annual basis.

For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,473, up from $1,438 in January. 

Looking at purchase applications for new home sales, the median mortgage payment for a purchase mortgage increased to $2,534 in February, up from $2,501 in January, according to data from the MBA’s Builder Application Survey.

Photo: Alexander Grey

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