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MBA: "Mortgage Application Payments Jumped 8.8 Percent to $1,889 in April"

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by Calculated Risk on 5/26/2022 07:00:00 AM

This is a new monthly affordability index from the Mortgage Bankers Association (MBA).

From the MBA: Mortgage Application Payments Jumped 8.8 Percent to $1,889 in April

Homebuyer affordability decreased in April, with the national
median payment applied for by applicants rising 8.8 percent to $1,889 from $1,736 in March. This is
according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI),
which measures how new monthly mortgage payments vary across time – relative to income – using
data from MBA’s Weekly Applications Survey (WAS).

“Rapid home-price growth, low inventory, and an 80-basis-point surge in mortgage rates slowed
purchase applications in April, with the typical borrower’s principal and interest payment increasing
$153 from March and $569 from a year ago,” said Edward Seiler, MBA’s Associate Vice President,
Housing Economics, and Executive Director, Research Institute for Housing America. “Despite strong
employment and wage growth, housing affordability has worsened since the start of the year. Mortgage
payments are taking up a larger share of homebuyers’ incomes, and sky-high inflation is making it more
difficult for some would-be buyers to save for a down payment or come up with the additional cash they
need to afford a higher monthly payment.”

Added Seiler, “MBA’s updated forecast calls for mortgage rates to remain above 5 percent for most of
2022, but prospective homebuyers should start to see moderation from the double-digit price
appreciation reported for well over a year in most of the country.”

Click on graph for larger image.

The national PAPI (Figure 1) increased 7.8 percent to 162.7 in April from 150.9 in March, meaning
payments on new mortgages take up a larger share of a typical person’s income. Compared to April
2021 (120.2), the index jumped 27.0 percent. For borrowers applying for lower-payment mortgages (the
25th percentile), the national mortgage payment increased 9.6 percent to $1,236 from $1,129 in March.

emphasis added

This will likely increase further in May.

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