The average monthly mortgage payment applied for by purchase applicants increased to $2,205 in January, up from $2,127 in December, indicating that home purchases generally became less affordable, according to to the Mortgage Bankers Association’s (MBA) 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.
The index increased 3.1% to a score of 165.9 in January, up from 160.8 in December.
Median earnings were up 5.2% compared to one year ago, 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 to $1,519 in January, up from $1,456 in December.
“Homebuyer affordability conditions declined further in January as volatile mortgage rates and high home prices continue to impact many prospective buyers’ purchasing power,” says Edward Seiler, associate vice president, housing economics, and executive director, Research Institute for Housing America, in a statement. “Even with persisting affordability challenges, MBA is forecasting for a small increase in purchase originations in 2025, with activity increasing 16 percent to $2.1 trillion.”
New home purchases were also less affordable in January compared with the month prior. The average monthly mortgage payment applied for by new-home purchase applicants increased to $2,531, up from $2,500 in in December.
The median purchase application amount for a new home increased to $324,800, up from $319,000.
The decrease in the index score follows a slight improvement the previous month.
Photo: Scott Webb
