The national median mortgage payment applied for by purchase applicants fell to $2,055 in December, down from $2,137 in November, according 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. 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.
“Homebuyer affordability improved for the second consecutive month in December as interest rates declined significantly from recent highs,” says Edward Seiler, associate vice president, housing economics, for the MBA and executive director, Research Institute for Housing America. “While the average median purchase application amount increased to $306,450, MBA expects that affordability conditions will continue to improve as mortgage rates fall further and as housing inventory continues to increase.”
While the national median mortgage payment was down $82 from November, it was up $135 from one year ago, equal to a 7.1% increase.
Photo: Alexander Grey