Data from the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI) indicate that homebuyer affordability declined further in May, with the national median payment applied for by purchase applicants increasing 2.5% to $2,165 from $2,112 in April.
“Prospective buyers continue to grapple with high interest rates and low housing inventory,” says MBA’s Edward Seiler. “While supply remains low, we do expect that inventory will pick up in the near term, which will provide more opportunities for borrowers to buy a home.”
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 hit a new record high this past May, increasing 2.5% to 176.7 from 172.4 in April. Compared to May 2022 (163.2), the index is up 7.6%. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,462 in May from $1,430 in April.
The top five states with the highest PAPI were Nevada (263.4), Idaho (258.5), Arizona (234.4), California (227.7) and Florida (225.3). The top five states with the lowest PAPI were Connecticut (122.2), West Virginia (122.6), Alaska (122.6), Louisiana (133.7) and Wyoming (136.8).
Additional findings of MBA’s PAPI – May 2023:
- The national median mortgage payment for FHA loan applicants was $1,802 in May, up from $1,750 in April and up from $1,430 in May 2022.
- The national median mortgage payment for conventional loan applicants was $2,202, up from $2,170 in April and from $1,960 in May 2022.
Photo by Emil Kalibradov on Unsplash.