The national median mortgage payment continued to climb in October. According to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI), the national median payment applied for by applicants increased 3.7% in October to $2,012 from $1,941 in September.
“Prospective homebuyers continued to feel the effects of higher mortgage rates in October, with the 70-basis-point jump in rates leading to the typical monthly mortgage payment rising to a new survey high of $2,012,” said Edward Seiler, MBA’s associate vice president of housing economics and executive director at Research Institute for Housing America. “Higher mortgage rates are also squeezing the purchasing power of prospective buyers.”
MBA notes that mortgage payments are up by $629 in the first 10 months of the year, equal to a 45.5% increase.
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.
The national PAPI increased 2.7%to 167.9 in October from 163.6 in September. The index eclipsed the previous high of 164.2 in May 2022. The index has jumped 36.0% in the first 10 months of 2022 and is up 38.1% compared to October 2021.