Mortgage App Payments Inched Upward in March

Homebuyer affordability declined in March, with the national median payment applied for by purchase applicants increasing 1.6% to $2,093 from $2,061 in February.

This is according to the Mortgage Bankers Association's (MBA) 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).

Key Findings of MBA's Purchase Applications Payment Index (PAPI) – March 2023

• The national median mortgage payment was $2,093 in March, up from $2,061 in February and from $1,964 in January. It is up $357 from one year ago, equal to a 20.6% increase.

• The national median mortgage payment for FHA loan applicants was $1,755 in March, up from $1,707 in February and from $1,254 in March 2022.

• The national median mortgage payment for conventional loan applicants was $2,145, up from $2,117 in February and from $1,819 in March 2022.

• The top five states with the highest PAPI were: Idaho (256.5), Nevada (252.2), Arizona (227.7), Utah (219.6), and Florida (215.8).

• The top five states with the lowest PAPI were: West Virginia (118.9), Louisiana (125.3), Alaska (125.9), Connecticut (126.1), and Iowa (129.8).

• Homebuyer affordability decreased for Black households, with the national PAPI increasing from 173.1 in February to 175.8 in March.

• Homebuyer affordability decreased for Hispanic households, with the national PAPI increasing from 157.8 in February to 160.2 in March.

• Homebuyer affordability decreased for White households, with the national PAPI increasing from 169.5 in February to 172.2 in March.

“Homebuyer affordability remained constrained in March as elevated mortgage rates and low inventory kept prices high, leading many prospective homebuyers to delay decisions to enter the market,” said Edward Seiler, MBA's Associate VP, Housing Economics, and Executive Director, Research Institute for Housing America. “The affordability index hit a new survey high last month, with both the typical purchase application amount and monthly payment rising on a monthly and annual basis. While many prospective buyers currently remain on the sidelines, MBA expects mortgage rates to decline slowly as the year progresses, which will help with affordability and may spur sales activity.”

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) increased 1.6 percent to 171.5 in March from 168.9 in February. The increase means that the PAPI hit a new record high last month. Compared to March 2022 (147.1), the index is up 13.7 percent. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,411 in March from $1,391 in February.

The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased to $2,508 in March compared to $2,492 in February.

To read the full report, including more data, charts and methodology, click here.