WASHINGTON – Homebuyer affordability improved in February, with the national median payment applied for by purchase applicants decreasing to $2,061 from $2,070 in January, according to the Mortgage Bankers Association's Purchase Applications Payment Index (PAPI).
“Homebuyer affordability saw a modest improvement in February, as slightly lower mortgage rates helped ease monthly payment burdens despite a small uptick in loan sizes. The February PAPI declined over the month and is nearly 10% lower than a year ago, reflecting both reduced payments and steady income growth,” said Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America. “While affordability conditions remain challenging in many markets, these incremental gains — felt across more than half of states — are an encouraging sign for prospective buyers, particularly those seeking lower-payment options.”
“Unfortunately, this month’s turmoil in the Middle East has put upward pressure on mortgage rates, which in turn could impact overall affordability in the months ahead," Added Seiler.
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.