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MBA: Median Mortgage Application Payment Up 5.0% in March compared to February

by Calculated Risk on 4/28/2022 07:00:00 AM

This is a new monthly affordability index from the Mortgage Bankers Association (MBA).

From the MBA: Mortgage Application Payments Jumped 5 Percent to $1,736 in March

Homebuyer affordability declined in March, with the national
median payment applied for by applicants rising 5.0 percent to $1,736 from $1,653 in February. This is
according to the Mortgage Bankers Association’s (MBA) new Purchase Applications Payment Index
(PAPI), which measures how new monthly mortgage payments vary across time – relative to income –
using data from MBA’s Weekly Applications Survey (WAS).

“The start of the spring homebuying season is off to a mixed start. The healthy labor market and robust
wage gains fueled demand throughout the country in March, but rapid home-price growth and the 42-
basis-point surge in mortgage rates last month slowed purchase application activity. A typical borrower’s
principal and interest payment was $387 more than in March 2021,” said Edward Seiler, MBA’s
Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing
America. “Swift price-appreciation, sky-high inflation, low inventory, and mortgage rates now two
percentage points higher than last year are all headwinds for the housing market in the coming months
– especially for first-time buyers.”

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.

Click on graph for larger image.

The national PAPI (Figure 1) increased 5.0 percent to 150.9 in March from 143.7 in February, meaning
payments on new mortgages take up a larger share of a typical person’s income. Compared to March
2021 (122.9), the index jumped 22.8 percent. For borrowers applying for lower-payment mortgages (the
25th percentile), the national mortgage payment increased 3.2 percent to $1,129 from $1,094 in
February
emphasis added

This will increase further in April with the further increase in mortgage rates.

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