Homebuyer affordability improved month-over-month in March, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI).
The report shows that the national median mortgage payment applied for by purchase applicants decreased to $2,173 in March, down from $2,205 in February.
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 slightly in March as lower mortgage rates spurred renewed activity in the housing market,” says Edward Seiler, associate vice president, housing economics, and executive director, Research Institute for Housing America, in a release. “Despite improving conditions in March, the outlook in the upcoming months is cloudier. Ongoing affordability concerns, declining consumer confidence, and volatility in the financial markets could all put downward pressure on homebuyer demand.”
An increase in the index score indicates that borrower affordability conditions have declined.
This is due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings.
A decrease in the index score is indicative of improving borrower affordability conditions and occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.
The MBA’s data show that median earnings in March were up 4.8% compared to one year ago, which, in turn, has helped improve affordability conditions.
For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,499 in March from $1,506 in February.
Looking just at new home purchases, the MBA’s Builders’ Purchase Application Payment Index (BPAPI) shows that the median mortgage payment for new home purchases decreased to $2,288 in March, down from $2,463 in February.
Photo: Blake Wheeler