“PAPI is at its lowest level since March 2022 and is likely to continue to improve as mortgage rates hold to around 6 percent and more supply comes onto the market,” said Edward Seiler, associate vice president of housing economics at the MBA.
The MBA’s PAPI, which measures mortgage payment-to-income ratios using actual application data from the Weekly Applications Survey, fell to 152.0 in October from 155.0 in September. Payments decreased 4.2% while earnings growth pushed the annual decline in PAPI to 5.5%.
Borrowers at the lower end of the spectrum also saw relief. Those applying for lower-payment mortgages saw their median payment decline to $1,402 from $1,418 the previous month.
Affordability gains span borrower types and regions
FHA applicants saw median payments drop to $1,789 in October from $1,792 in September.
Conventional borrowers experienced a steeper decline, with median payments falling to $2,063 from $2,105 in September. Both segments remain well below year-ago levels.