The national median payment applied for by purchase applicants decreased to $2,140, down from from $2,167 in June, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI).
“Homebuyer affordability conditions improved for the third consecutive month as rates below 7 percent and rising housing inventory continue to bode well for prospective homebuyers,” says Edward Seiler, associate vice president, housing economics, and executive director, Research Institute for Housing America. “MBA is expecting that slower home-price appreciation, coupled with lower rates, will ease affordability constraints and lead to increased activity in the housing market.”
The index measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey (WAS). An increase in the index – 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.
In July, the index decreased 1.9% to a score of 167.7 – down from 170.9 in June.
Median earnings were up 2.9% compared to one year ago, and while payments decreased 1.0%, the moderate earnings growth means that the PAPI is down 3.8% on an annual basis.
For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,444 in July from $1,460 in June.
The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for new-home purchase mortgages from MBA’s Builder Application Survey decreased to $2,452 in June, down from $2,510 in June.
Photo: Phil Hearing