The national median payment applied for by purchase applicants in June decreased to $2,167, down from $2,219 in May, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI), which measures homebuyer affordability.
“Homebuyer affordability conditions improved for the second straight month as declining mortgage rates continue to increase purchasing power and is enticing some borrowers back into the housing market,” says Edward Seiler, associate vice president, housing economics, and executive director, Research Institute for Housing America, in a statement. “The median loan application amount fell to $320,512 in June, indicating that home-price growth is moderating, which should boost additional activity.”
The report measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey (WAS).
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 – indicative of improving borrower affordability conditions – occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.
The national PAPI decreased 2.4% to an index score of 170.9 in June, down from 175.0 in May.
Median earnings were up 3.9% compared to one year ago, and while payments increased 0.2%, the strong earnings growth means that the PAPI is down 3.6% on an annual basis.
For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,460 in June from $1,509 in May.
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 $2,510 in June, down from $2,522 in May.
Photo: Alexander Grey