Homebuyer affordability decreased in February; mortgage payments increased 25% from one year ago

Homebuyer affordability decreased in February. The median payment for purchase applicants increased 4.9% to $2,061. That’s a jump of nearly $100 from January, when the median payment was $1,964. It also represents an increase of nearly 25% (24.7%) or $408 per month from one year ago.

This is according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI), which measures changes in monthly mortgage payments relative to income.

An increase in the PAPI indicates declining borrower affordability conditions. This is when 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 indicates improving borrower affordability conditions. This occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.

The national PAPI increased 4.9% to 169.7 in February, hitting a new record high. It was 161.7 in January. The previous high was 167.2 in October 2022.

The national mortgage payment increased to $1,391 for lower-payment mortgages, which are considered mortgages in the 25th percentile.

For new construction purchases, the median mortgage payment increased to $2,492 in February. That’s up from $2,379 in January, according to the Builders’ Purchase Application Payment Index (BPAPI).

Other findings include:

• The national median mortgage payment for FHA loan applicants was $1,707 in February. That’s up from $1,619 in January, and over $500 more than February 2022’s median payment of $1,201.
• The national median mortgage payment for conventional loan applicants was $2,117. That’s up from $2,009 in January, and up from $1,750 one year earlier.
• The top five states with the highest PAPI were:
  • Nevada (251.6)
  • Idaho (249.3)
  • Arizona (225.7)
  • Utah (222.8)
  • California (217.4).
• The top five states with the lowest PAPI were
  • Connecticut (111.7)
  • North Dakota (118.2)
  • West Virginia (119.8)
  • Louisiana (121.1)
  • Vermont (121.6)
• Homebuyer affordability decreased for Black, Hispanic and White households
  • The national PAPI for Black households increased from 161.7 in January to 169.7 in February
  • For Hispanic households, it increased from 154.6 in January to 162.2 in February
  • For White households, it increased from 162.9 in January to 170.9 in February

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