HousingWireHousingWire
Homebuyer affordability dipped slightly in April, with the typical monthly mortgage payment rising to $2,186, up $13 from March. Despite higher mortgage rates, affordability has improved over the past year as typical payments are down by $70 from one year ago, equal to a 3.1% decrease.
That’s according to the Mortgage Bankers Association (MBA)’s Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time, relative to household earnings, using data from MBA’s Weekly Applications Survey.
The national PAPI decreased 0.6% from March to a reading of 163.0 in April. Median earnings were up 4.8% compared to one year ago, and while payments decreased 3.1%, the significant earnings growth means that the PAPI is down 8.4% on an annual basis.
For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment decreased from $1,499 in March to $1,497 in April.
The top five states with the highest PAPI scores were Idaho (247.8), Nevada (244.8), Arizona (226.6), Utah (212.1) and Rhode Island (208.7).
A decrease in the PAPI occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase, indicating improved borrower affordability conditions.
“Homebuyer affordability conditions declined somewhat in April and remain elevated overall. Economic uncertainty and high mortgage rates continue to weigh on prospective buyers’ decisions on whether to enter the housing market,” said Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America.
“Even with the increase in mortgage rates over the month, the median purchase application loan amount decreased slightly to $328,932, indicating that home prices are moderating. Slower home-price growth and the overall trend of more inventory are positives for housing this summer.”
The MBA’s mortgage payment-to-rent ratio increased to 1.48 in March, meaning that mortgage payments for home purchases have increased relative to rents. The U.S. Census Bureau’s national median asking rent fell slightly to $1,468, down from $1,475 in the fourth quarter of 2024, while the 25th-percentile mortgage-application-payment-to-median-asking-rent ratio increased to 1.02 in March (up from 0.99 in December 2024).
The median mortgage payment for new-home purchases rose to $2,306 in April, up from $2,288 in March, as measured by the trade group’s Builders’ Purchase Application Payment Index.
For Federal Housing Administration (FHA) loan applicants, the national median mortgage payment was $1,895 in April, up from $1,872 in March and down from $1,955 in April 2024. The national median mortgage payment for conventional loan applicants was $2,206, up from $2,200 in March and down from $2,271 in April 2024.
Black households saw homebuyer affordability increase with the national PAPI dropping from 161.8 in March to 160.7 in April. Hispanic households saw the figure decrease from 155.5 in March to 154.5 in April, while white households saw a decrease from 165.7 to 164.7.
