The national median payment applied for by applicants decreased from $1,844 in July to $1,839 in August, improving homebuyer affordability for the third straight month, according to a report issued last week by the Mortgage Bankers Association (MBA).
MBA’s Purchase Applications Payment Index (PAPI) measures how new monthly mortgage payments vary across time—relative to income—using data from MBA’s Weekly Applications Survey. The national PAPI decreased from 158.3% in July to 157.9% in August, meaning payments on new mortgages take up a smaller share of a typical person’s income. Compared to 115.7% from August 2021, the index has jumped 36.5%. For borrowers applying for lower-payment mortgages, the national mortgage payment between July and August 2022 was unchanged at $1,210.
Key highlights:
- The national median mortgage payment was $1,839 in August, down from $1,844 in July and $1,893 in June.
- Monthly payments are still up by $456 in the first eight months of the year, a 33% increase.
- Out of 50 states, 32 had lower PAPI values in August than in July, which includes six of the top 10 states with the highest PAPI values.
- The national median mortgage payment for FHA loan applicants was $1,469 in August, up from $1,461 in July, and up from $1,009 in August 2021.
- The national median mortgage payment for conventional loan applicants was $1,901, up from $1,892 in July, and up from $1,350 in August 2021.
- The states with the highest PAPI were Idaho at 257.5%, Nevada at 249.4%, Arizona at 224.2%, Utah at 213.3%, and California at 202.4%.
- The lowest PAPI was in the states of Washington, D.C. at 101%, Alaska at 108.2%, Connecticut at 108.9%, Louisiana at 110.5%, and Oklahoma at 120%.
- Homebuyer affordability increased slightly for Black,Hispanic, and White households, with the national PAPI decreasing by .4%, .4% and .8% respectively.
Major takeaway:
“Most of the country saw modest improvements in homebuyer affordability for the third straight month because of slightly lower mortgage rates amidst steady income growth. The healthy labor market continues to be a positive for the housing market, despite ongoing economic uncertainty and high inflation,” said Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “Higher mortgage rates have reduced borrowers’ purchasing power since the start of the year. The median loan amount in August was $313,500, down from a peak of $340,000 in February.”
Added Seiler, “The recent stretch of modest affordability improvement likely hit a speedbump this month, as mortgage rates have jumped above 6%.”
For more information, visit www.mba.org.
