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Homebuyer Affordability Declined In March

Steve Goode
Apr 28, 2022
Mortgage Bankers Association Logo

The national median payment applied for rose from $1,653 in February to $1,736 in March.

KEY TAKEAWAYS
  • The national median mortgage payment applied for by applicants was $1,736 in March, up from $1,653 in February, $1,526 in January, and $1,349 in March 2021.
  • The national median mortgage payment for conventional loan applicants was $1,819 in March, up from $1,750 in February and $1,424 in March 2021.

Homebuyer affordability declined by 5% in March, according to the Mortgage Bankers Association’s new Purchase Applications Payment Index report.

According to the monthly PAPI report, which measures how new monthly mortgage payments vary across time relative to income, the national median payment applied for rose from $1,653 in February to $1,736 in March.

An increase in MBA’s PAPI – indicative of declining borrower affordability conditions – means 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.

“The start of the spring homebuying season is off to a mixed start. The healthy labor market and robust wage gains fueled demand throughout the country in March, but rapid home-price growth and the 42-basis-point surge in mortgage rates last month slowed purchase application activity. A typical borrower’s principal and interest payment was $387 more than in March 2021,” said Edward Seiler, MBA's associate vice president, housing economics, and executive director, research Institute for Housing America. “Swift price-appreciation, sky-high inflation, low inventory, and mortgage rates now two percentage points higher than last year are all headwinds for the housing market in the coming months – especially for first-time buyers.”

Seiler said the MBA’s updated forecast calls for an annual decline in existing sales, higher home prices and mortgage rates, and a smaller, but solid 4% gain in purchase origination volume.

Other highlights in the report included:

  • The national median mortgage payment applied for by applicants was $1,736 in March, up from $1,653 in February, $1,526 in January, and $1,349 in March 2021.
  • The national median mortgage payment for conventional loan applicants was $1,819 in March, up from $1,750 in February and $1,424 in March 2021.
  • The top five states with the highest PAPI were: Idaho (241.2), Nevada (223.9), Arizona (200.7), California (192.5), and Utah (190.9).
  • The top five states with the lowest PAPI were: Washington, D.C. (89.1), Alaska (98.1), Connecticut (98.4), West Virginia (106.8), and Louisiana (107.1).

Homebuyer affordability decreased for Black, Hispanic and white households, according to the report.

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