MBA: Mortgage Application Payments Decrease 2.8% to $2,137 in November
Homebuyer affordability improved in November, with the national median payment applied for by purchase applicants decreasing to $2,137, according to the Mortgage Bankers Association’s Purchase Applications Payment Index.
The PAPI measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey.
“Homebuyer affordability improved in November, with a decline in mortgage rates providing relief to prospective homebuyers,” said Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “MBA expects that affordability conditions will continue to improve as mortgage rates decline, which should generate increased demand heading into the spring homebuying season.”
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 (Figure 1) decreased 2.8 percent to 170.9 in November from 175.9 in October. With this decrease, the PAPI is now at the lowest level since February 2023. Median earnings were up 3.9 percent compared to one year ago, and while payments increased 8.1 percent, the strong earnings growth means that the PAPI is up 4.0 percent on an annual basis. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased to $1,425 in November from $1,466 in October.
The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey decreased from $2,672 in October to $2,597 in November.
Additional Key Findings of MBA’s Purchase Applications Payment Index (PAPI) – November 2023
The national median mortgage payment was $2,137 in November—down $62 from October. It is up $160 from one year ago, equal to an 8.1% increase.
The national median mortgage payment for FHA loan applicants was $1,902 in November, down from $1,955 in October and up from $1,631 in November 2022.
The national median mortgage payment for conventional loan applicants was $2,137, down from $2,208 in October and up from $1,994 in November 2022.
The top five states with the highest PAPI were: Idaho (271.6), Nevada (260.6), Arizona (239.3), Florida (226.0), and Utah (219.5).
The top five states with the lowest PAPI were: Wyoming (118.5), Louisiana (120.7), Alaska (122.4), Connecticut (125.9), and New York (126.3).
Homebuyer affordability increased for Black households, with the national PAPI decreasing from 176.9 in October to 171.8 in November.
Homebuyer affordability increased for Hispanic households, with the national PAPI decreasing from 163.8 in October to 159.2 in November.
Homebuyer affordability increased for White households, with the national PAPI decreasing from 178.3 in October to 173.3 in November.
About MBA’s Purchase Applications Payment Index
The Mortgage Bankers Association’s Purchase Applications Payment Index (PAPI) measures how new mortgage payments vary across time relative to income. Higher index values indicate that the mortgage payment to income ratio (PIR) is higher than in a month where the index is lower. Contrary to other affordability indexes that make multiple assumptions about mortgage underwriting criteria to estimate mortgage payment level, PAPI directly uses MBA’s Weekly Applications Survey (WAS) data to calculate mortgage payments.
PAPI uses usual weekly earnings data from the U.S. Bureau of Labor Statistics’ Current Population Survey (CPS). Usual weekly earnings represent full-time wage and salary earnings before taxes and other deductions and include any overtime pay, commissions, or tips usually received. Note that data are not seasonally adjusted.
MBA’s Builders’ Purchase Application Payment Index (BPAPI) uses MBA’s Builder Application Survey (BAS) data to create an index that measures how new mortgage payments vary across time relative to income, with a focus exclusively on newly built single-family homes. As with PAPI, higher index values indicate that the mortgage payment to income ratio (PIR) is higher than in a month where the index is lower. To create BPAPI, principal and interest payment amounts are deflated by the same earnings series as in PAPI.
The rent data series calculated for MBA’s national mortgage payment to rent ratio (MPRR) comes from the U.S. Census Bureau’s Housing Vacancies and Homeownership (HVS) survey’s median asking rent. The HVS data is quarterly, and as such, the mortgage payment to rent ratio will be updated quarterly.
MPRR data was not included in the November 2023 data.
For additional information on MBA’s Purchase Applications Payment Index, click here.
