Mortgage Application Payments Increased In May
By CU Today Staff —
WASHINGTON—Homebuyer affordability weakened in May as rising mortgage rates and larger loan amounts pushed the typical monthly mortgage payment higher, according to new data from the Mortgage Bankers Association.
MBA said the national median payment applied for by purchase applicants rose to $2,198 in May, up from $2,152 in April, while its Purchase Applications Payment Index (PAPI), a measure of mortgage affordability, increased 2.2% to 159.4. An increase in the index indicates affordability has declined as mortgage payments consume a larger share of borrowers' incomes.
“Affordability conditions weakened in May, as rising mortgage rates, combined with increasing loan application amounts, drove mortgage payments higher,” said Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America.
He noted affordability declined in 33 states, although conditions remain better than a year ago because earnings have continued to outpace payment growth.
MBA said the PAPI was down 4.4% from a year earlier, reflecting 4.0% earnings growth that more than offset a 0.6% annual decline in mortgage payments. For borrowers seeking lower-payment mortgages, the median monthly payment increased to $1,532 from $1,493 in April, while the Builders' Purchase Application Payment Index showed the median payment for new-home purchase applications edged down to $2,173 from $2,188.
Originally reported by CU Today.