MBA data brings good news for homebuyers
Homebuyers have seen slight relief in affordability, according to the Mortgage Bankers Association’s (MBA) September Purchase Applications Payment Index (PAPI).
The median mortgage payment applied for by purchasers dropped to $2,155, a slight decrease from August’s $2,170. This change offers a glimpse into the shifting dynamics of mortgage payments in relation to income, based on data from MBA’s Weekly Applications Survey.
“Although there was a modest improvement in affordability last month, higher rates and low housing inventory are both keeping many would-be buyers out of the housing market,” said Edward Seiler, MBA’s associate vice president of housing economics.
Looking ahead, Seiler expressed cautious optimism, predicting a slight uptick in loan originations and a potential easing of mortgage rates in 2024.
The PAPI, which tracks the relationship between monthly mortgage payments and income, showed a 0.7% dip to 173.8 in September from 175 in August. This decline was due to lower loan amounts, even with the backdrop of rising interest rates. Despite this, the PAPI is still 3.6 points below its record high set in May.
Interestingly, while payments have risen by 11% year-over-year – a 4.5% increase in median earnings during the same period means the PAPI has grown by 6.3% annually. For those at the 25th percentile of mortgage applications, the national payment decreased slightly to $1,437 in September from $1,444 in August.
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The report also highlighted that the median mortgage payment for builder-originated mortgages, as per MBA’s Purchase Application Payment Index (BPAPI), increased from $2,609 in August to $2,640 in September.
Other notable findings from the September 2023 PAPI include:
- The national median mortgage payment for FHA loan applicants rose to $1,920 in September, up from $1,909 in August.
- The median payment for conventional loan applicants was $2,180 in September, a slight decrease from $2,187 in August.
- States with the highest PAPI included Idaho, Nevada, Arizona, California, and Florida, while the lowest were Alaska, Connecticut, New York, West Virginia, and Louisiana.
- Affordability showed slight improvements across different racial and ethnic groups, with Black, Hispanic, and White households all seeing decreases in their national PAPIs in September.
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