Homebuyer affordability squeezed slightly as result
Homebuyer affordability saw a slight decline in March, according to the Mortgage Bankers Association (MBA), as the national median mortgage payment rose to $2,201 from $2,184 the previous month.
The Purchase Applications Payment Index (PAPI) by MBA, which gauges the monthly changes in mortgage payments relative to income, increased by 0.8% to 174.2 from 172.8 in February.
“Homebuyer affordability conditions remain volatile as recent economic data continues to show that the economy and job market are strong,” said Edward Seiler, MBA’s associate vice president, for housing economics,
“These factors will keep mortgage rates at elevated levels for the near future, sidelining some prospective buyers from entering the housing market. While rates remain elevated and housing supply is low, we do expect to see renewed activity as mortgage rates decline to low-to-mid 6 percent range by the end of the year.”
In its release, MBA also noted that while median earnings have increased by 3.5% compared to last year, mortgage payments have risen by 5.2%. This disproportionate growth has resulted in a 1.6% annual increase in the PAPI.
There was a similar increase for those applying for mortgages at the lower end of the payment spectrum. According to MBA, the national mortgage payment for these applicants grew to $1,488 in March, up from $1,473 in February.
The upward trend continued in the Builders’ Purchase Application Payment Index (BPAPI), which tracks the median mortgage payment for purchase mortgages sourced from builders.
As indicated by the BPAPI, the median payment rose to $2,556 in March, marking a slight increase from $2,534 the previous month. This points to ongoing fluctuation in the housing finance landscape, according to the MBA release, affecting a broad spectrum of buyers from entry-level to those purchasing newly built homes.
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