WASHINGTON– Homebuyer affordability declined in March, with the national median payment applied for by purchase applicants increasing to $2,131 from $2,061 in February, the Mortgage Bankers Association's reported.
“Homebuyer affordability conditions declined in March, as rising mortgage rates and higher loan amounts continued to stretch household budgets. The national PAPI increased by 4.9 points, reflecting a broad-based decline in affordability across 44 states,” said Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America. “The combination of a 26-basis-point increase in rates, and a rise in the median purchase application amount to $335,000, reflects the ongoing pressure facing prospective buyers. Looking ahead, while these headwinds may temper demand in the near term, improvements in housing supply and moderating home-price growth could help restore some stability to the housing market.”
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, MBA noted.
The national PAPI increased 3.4% to 154.9 in March from 149.8 in February. While payments decreased 2.0% over the last year, earnings growth of 3.9% means that the PAPI is down (affordability is higher) 5.6% on an annual basis. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,479 in March from $1,436 in February.