Home purchase affordability continued to decline in March, as the median monthly mortgage payment borrowers applied for increased 5% over February, the Mortgage Bankers Association said.
The MBA’s Purchase Applications Payment Index, which measures how new monthly mortgage obligations vary across time relative to the borrower’s income, reached a high of 150.9 in March, up from the previous record of 143.7 in February. The base month of PAPI is March 2012, with the value set at 100, and a higher index meaning affordability is less than the comparative period. February was the first time the index was published.
The index is 22.8% higher than it was for March 2021, when it was at 122.9. Since December 2021, the PAPI has climbed over 22%.
“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,” Edward Seiler, MBA’s associate vice president, housing economics, and the executive director of the Research Institute for Housing America, said in a press release. “A typical borrower’s principal and interest payment was $387 more than in March 2021.”
The national median payment applied for by homebuyers rose by 5% in March to $1,736 from $1,653 in February; it was $1,349 in March 2021.
Borrowers seeking a Federal Housing Administration-insured mortgage found the median mortgage payment increased to $1,254 in March, compared with $1,201 in February and $1,018 in March 2021. For conventional loans — which includes conforming and jumbo mortgage borrowers — the median mortgage payment was $1,819 in March, versus $1,750 for February and $1,424 in March 2021.
“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,” Seiler said.
Black households have the highest PAPI, at 153.8 for March, an increase of 5% from February’s 146.5. The PAPI for white households increased to 151.6 for March, which was also up 5% on a month-to-month basis from 144.4. Hispanic households’ PAPI increased to 144.4 from February’s 137.5.