by Calculated Risk on 3/24/2022 07:00:00 AM

This is a new monthly affordability index from the Mortgage Bankers Association (MBA).

From the MBA: Median Mortgage Application Payment Jumped 8.3 Percent in February to $1,653

Homebuyer affordability decreased in February, with the national median payment applied for by applicants jumping 8.3 percent to $1,653 from $1,526 in January. This is according to the Mortgage Bankers Association's (MBA) new 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).

“Low unemployment has spurred strong income growth in early 2022, but homebuyer affordability has decreased due to the quick rise in mortgage rates amidst steep home-price growth,” said Edward Seiler, MBA's Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “The 30-year fixed-rate mortgage spiked 73 basis points from December 2021 through February 2022. Together with increased loan application amounts, a mortgage applicant’s median principal and interest payment in February jumped $127 from January and $337 from one year ago.”

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.
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Click on graph for larger image.

This graph shows the MBA's PAPI since 2009.

The national PAPI (Figure 1) increased 8.3 percent to 146.3 in February 2022 from 135.1 in January 2022, meaning payments on new mortgages take up a larger share of a typical person’s income. Compared to February 2021 (120.0), the index jumped 21.9 percent. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased 9.8 percent to $1,094 from $996 in January 2022.

This will increase further in March with the recent sharp increase in mortgage rates.