With the national median payment requested by purchase applicants rising to $2,127 from $2,041 in September, homebuyer affordability decreased in October. This is in line with the Mortgage Bankers Association‘s (MBA) Purchase Applications Payment Index (PAPI), which uses information from the MBA Weekly Applications Survey (WAS) to calculate how new monthly mortgage payments change over time in relation to income.
“Homebuyer affordability conditions declined notably in October as rapidly rising mortgage rates pushed the national median mortgage payment up $86 from September,” said Edward Seiler, MBA’s Associate VP of Housing Economics and Executive Director for Research Institute for Housing America. “With the increase in mortgage rates, the PAPI reached its highest level since July, and we expect weaker homebuyer affordability to remain a hurdle for prospective buyers in the final months of 2024.”
The mortgage payment to income ratio (PIR) is larger when the MBA’s PAPI rises, which is a sign of deteriorating borrower affordability conditions. This can be caused by rising mortgage rates, growing application loan amounts, or a decline in earnings. When loan application amounts, mortgage rates, or incomes decline, the PAPI declines, which is a sign of improving borrower affordability conditions.
Key Findings of MBA’s PAPI: October 2024
- The national median mortgage payment was $2,127 in October—up $86 from September. It is down by $72 from one year ago, equal to a 3.3% decrease.
- The national median mortgage payment for FHA loan applicants was $1,842 in October, up from $1,753 in September and down from $1,955 in October 2023.
- The national median mortgage payment for conventional loan applicants was $2,134, up from $2,053 in September and down from $2,208 in October 2023.
- The top five states with the highest PAPI were: Idaho (241.9), Nevada (241.6), Arizona (217.2), Utah (205.1), and Rhode Island (205.0).
- The top five states with the lowest PAPI were: Louisiana (114.8), Connecticut (115.1), Alaska (119.1), Vermont (119.6), and West Virginia (123.0).
- Homebuyer affordability decreased for Black households, with the national PAPI increasing from 157.9 in September to 162.3 in October.
- Homebuyer affordability decreased for Hispanic households, with the national PAPI increasing from 150.1 in September to 154.2 in October.
- Homebuyer affordability decreased for White households, with the national PAPI increasing from 160.2 in September to 164.7 in October.
The national PAPI rose from 157.9% in September to 162.3% in October, a 2.8% rise. While payments fell 3.3%, median wages increased 3.2%, and the PAPI is down 6.3% annually as a result of the modest earnings rise. The national mortgage payment rose from $1,369 in September to $1,431 in October for borrowers who applied for lower-payment mortgages (the 25th percentile).
MBA’s national mortgage payment to rent ratio (MPRR) declined from 1.46 at the end of the second quarter (June 2024) to 1.34 at the end of the second quarter (September 2024), implying mortgage payments for house purchases have reduced compared to rents.
In Q2 of 2024, the HVS national median asking rent, as reported by the Census Bureau, rose to $1,523 ($1,481 in the same quarter). In September, the ratio of the median asking rent to the 25th percentile mortgage application payment dropped to 0.90 from 0.99 in June 2024.
The median mortgage payment for purchase mortgages from MBA’s Builder Application Survey rose from $2,333 in September to $2,470 in October, according to the Builders’ Purchase Application Payment Index (BPAPI).
To read the full report, including more data, charts, and methodology, click here.
