Elevated mortgage rates, low inventory, and high prices constrained home buyer affordability in March. As a result, many prospective buyers elected to delay decisions to enter the housing market, according to the Mortgage Bankers Association (MBA).
According to the MBA’s Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time, the national median payment applied for by purchase applicants increased 1.6% to $2,093 month over month in March.
The national PAPI rose to 171.5 in March, a new record-high, according to the MBA. Compared with March 2022, the PAPI is up 13.7%.
“The affordability index hit a new survey high last month, with both the typical purchase application amount and monthly payment rising on a monthly and annual basis,” says Edward Seiler, the MBA’s associate vice president of housing economics and the executive director of the Research Institute for Housing America. “While many prospective buyers currently remain on the sidelines, MBA expects mortgage rates to decline slowly as the year progresses, which will help with affordability and may spur sales activity.”
An increase in the PAPI—indicative of declining borrower affordability conditions—means that the mortgage payment is higher due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings. The five states with the highest PAPI were Idaho (256.5), Nevada (252.2), Arizona (227.7), Utah (219.6), and Florida (215.8); the five states with the lowest PAPI were West Virginia (118.9), Louisiana (125.3), Alaska (125.9), Connecticut (126.1), and Iowa (129.8).
For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,411 in March from $1,391 in February. The Builders’ Purchase Application Payment Index showed the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased to $2,508 in March from $2,492 in February.
According to the PAPI, the national median mortgage payment for FHA loan applicants was $1,755 in March, up from $1,707 in February and from $1,254 in March 2022. For conventional loan applicants, the national median mortgage payment increased 1.3% month over month to $2,145 in March.
