The national median mortgage payment applied for by borrowers was $2,057 in August —down $83 from July and down $113, or 5.2%, from August 2023, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI), which measures home affordability using multiple economic factors including mortgage rates, home prices and income.
“Homebuyer affordability conditions improved for the fourth consecutive month, with lower mortgage rates, rising incomes, and slower home-price growth giving prospective buyers’ budgets a much-needed boost,” says Edward Seiler, associate vice president, housing economics, and executive director, Research Institute for Housing America, in a statement. “MBA expects that lower mortgage rates, coupled with increasing housing inventory, will entice additional homebuyers to enter the housing market.”
The national PAPI decreased 3.9% in August compared with July, falling to a score of 167.2.
An increase in the PAPI is indicative of declining borrower affordability conditions (the mortgage payment to income ratio (PIR) is higher due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings) while a decrease is indicative of improving borrower affordability conditions (occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase).
Median earnings were up 3.2% in August, compared to one year ago, and while payments decreased 5.2%, the moderate earnings growth means that the PAPI is down 8.2% on an annual basis.
For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,388 in August from $1,444 in July.
Looking only at applications for new home purchases, the median mortgage payment for applied for decreased to $2,362 in August, down from $2,452 in July.
Photo: Alexander Dummer