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July mortgage payments fell, improving homebuyer affordability

The MBA said the national Purchase Applications Payment Index fell 1.3% to 155.8, even though payments were 2.2% higher than a year earlier.

Reported · Written up by our desk · Mortgages

The Mortgage Bankers Association reported improved homebuyer affordability in July, as the median mortgage payment for purchase applicants declined to $2,175, down from $2,191 in June. HousingWire said the MBA’s Purchase Applications Payment Index, or PAPI, fell 1.3% to 155.8.

The MBA noted that while July payments rose 2.2% year over year, wage growth helped offset the mortgage-payment increase. HousingWire also said the decline in the median loan amount offset a modest increase in mortgage rates, lowering the typical payment.

For lower-payment applicants, the median payment at the 25th percentile fell to $1,512 in July from $1,522 in June. HousingWire reported state-level variation, with Idaho the highest at 247.2 and Louisiana the lowest at 113.0.

HousingWire added that affordability improved across racial and ethnic groups in July, including declines in the PAPI for Black, Hispanic, and white households. The report also said the mortgage payment-to-rent ratio rose to 1.43 at the end of the second quarter, up from 1.35 at the end of the first quarter.

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