Homebuyer affordability improved slightly in September, as the national median payment applied for by purchase applicants fell to $2,041, down from $2,057 in August, 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 (WAS).
“Homebuyer affordability conditions improved for the fifth consecutive month, as mortgage rates near the low 6 percent range improved purchasing power for prospective buyers,” says Edward Seiler, associate vice president, housing economics, MBA, and executive director for the Research Institute for Housing America, in a statement. “Overall affordability is now at its highest level since August 2022, but the recent jump in rates will likely cause conditions to plateau. The MBA is forecasting for rates to be around 6.3% by the end of the year.”
The median purchase application amount increased to $328,000, up from from $320,100.
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.
The national PAPI decreased 0.8% to an index score of 157.9 in September – down from a score of 159.2 in August.
Median earnings were up 4.2% compared to one year ago, and while payments decreased 5.3%.
Looking only at new home purchases, the median mortgage payment decreased to $2,333 in September, down from $2,362 in August.
Photo: Aysegul Yahsi