Median Home Payments Feeling Impact of Economic Forces

When it comes to affordability, any change that is not down can be seen as a good thing, especially after affordability has done nothing than go down for the last several months. 

According to the Mortgage Bankers Association (MBA), the national median payment applied for by mortgage applicants remained essentially flat, only rising to $1,897 from $1,889 in April, an $8 change. 

This data comes to us from the MBA’s 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 ongoing affordability hit of higher home prices and fast-rising mortgage rates led to a slowdown in purchase applications in May. While the median principal and interest payment only increased $8 from April, a typical borrower is paying $514 more through the first five months of 2022 – a jump of 37.1%,” said Edward Seiler, MBA's Associate VP of Housing Economics, and also the Executive Director of the Research Institute for Housing America. “Inflationary pressures and rates above 5 percent are both headwinds for the housing market in the coming months. MBA’s new forecast anticipates that sales of new and existing homes will fall below 2021 levels.” 

The national PAPI increased 0.4% to 163.4 in May from 162.8 in April, meaning payments on new mortgages take up a larger share of a typical person’s income. Compared to May 2021 (120.6), the index jumped 35.5%. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased 0.36% to $1,241 from $1,236 in April. 

Other high-level takeaways from the report include: 

• The national median mortgage payment was $1,897 in May, up from $1,889 in April and $1,736 in March. Payments have increased $513 (37.1%) in the first five months of the year.   
• The national median mortgage payment for FHA loan applicants was $1,430 in May, up from $1,374 in April and $1,005 in May 2021. 
• The national median mortgage payment for conventional loan applicants was $1,960, down from $1,967 in April but up from $1,394 in May 2021. 
• The top five states with the highest PAPI were: Idaho (253.0), Nevada (249.7), Arizona (233.5), Utah (210.9), and California (206.9). 
• The top five states with the lowest PAPI were: Washington, D.C. (99.7), Alaska (102.6), Connecticut (111.2), West Virginia (113.0), and Oklahoma (118.5). 
• Homebuyer affordability decreased slightly for Black households, with the national PAPI increasing from 165.9 in April to 166.6 in May. 
• Homebuyer affordability decreased slightly for Hispanic households, with the national PAPI increasing from 155.8 in April to 156.4 in May. 
• Homebuyer affordability decreased slightly for White households, with the national PAPI increasing from 163.6 in April to 164.3 in May.