The Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI) maintains the May median payment applied for by home purchase applicants rose to $2,165 from $2,112 in April.
“Homebuyer affordability eroded further in May as prospective buyers continue to grapple with high interest rates and low housing inventory,” MBA Housing Economics Associate Vice President Housing and Research Institute for Housing America Executive Director Edward Seiler said. “While supply remains low, we do expect that inventory will pick up in the near term, which will provide more opportunities for borrowers to buy a home.”
The PAPI measures how new monthly mortgage payments vary across time relative to income, deploying data from MBA’s Weekly Applications Survey (WAS). Additionally, PAPI uses usual weekly earnings data from the U.S. Bureau of Labor Statistics’ Current Population Survey (CPS), the MBA noted.
According to the MBA, a rising PAPI indicator reflects declining borrower affordability conditions, signaling the mortgage payment to income ratio (PIR) is higher due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings.
Conversely, a PAPP decline is indicative of improving borrower affordability conditions occurring when loan application amounts decrease, mortgage rates decrease or earnings increase.
The Builders’ Purchase Application Payment Index (BPAPI) showed the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased from $2,445 in April to $2,515 in May, officials indicated.