Mortgage Application Payments Flat in December
January 30, 2025
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WASHINGTON, D.C. (January 30, 2025) – Homebuyer affordability improved slightly in December, with the national median payment applied for by purchase applicants decreasing to $2,127 from $2,133 in November. This is according to the Mortgage Bankers Association's (MBA) Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey (WAS).
“Homebuyer affordability conditions were essentially flat in December, the result of somewhat volatile mortgage rate movements and moderating home-price growth,” said Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “2024 was a sluggish year for home sales because of weak affordability conditions throughout the country. MBA expects 2025 conditions will improve as housing supply increases, giving prospective buyers more options and putting less pressure on their budgets.”
An increase in MBA’s PAPI – indicative of declining borrower affordability conditions – means that 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 – indicative of improving borrower affordability conditions – occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.
The national PAPI (Figure 1) decreased 0.3 percent to 160.8 in December from 161.3 in November. Median earnings were up 4.1 percent compared to one year ago, and while payments increased 3.5 percent, the significant earnings growth means that the PAPI is down 0.6 percent on an annual basis. For borrowers applying for lower-payment mortgages (the 25th percentile), the national mortgage payment increased to $1,446 in December from $1,436 in November.
The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages from MBA’s Builder Application Survey increased to $2,500 in December from $2,481 in in November.
Additional Key Findings of MBA's Purchase Applications Payment Index (PAPI) – December 2024
- The national median mortgage payment was $2,127 in December—down $6 from November. It is up by $72 from one year ago, equal to a 3.5% increase.
- The national median mortgage payment for FHA loan applicants was $1,866 in December, down from $1,898 in November but up from $1,822 in December 2023.
- The national median mortgage payment for conventional loan applicants was $2,128, down from $2,133 in November but up from $2,053 in December 2023.
- The top five states with the highest PAPI were: Idaho (249.5), Nevada (249.0), Arizona (230.3), Rhode Island (206.3), and Florida (205.8).
- The top five states with the lowest PAPI were: Connecticut (115.2), Alaska (117.3), Louisiana (118.9), D.C (121.3), and Vermont (122.1).
- Homebuyer affordability increased for Black households, with the national PAPI decreasing from 152.7 in November to 152.2 in December.
- Homebuyer affordability increased for Hispanic households, with the national PAPI decreasing from 154.1 in November to 153.6 in December.
- Homebuyer affordability increased for White households, with the national PAPI decreasing from 164.3 in November to 163.8 in December.
About MBA’s Purchase Applications Payment Index
The Mortgage Bankers Association’s Purchase Applications Payment Index (PAPI) measures how new mortgage payments vary across time relative to income. Higher index values indicate that the mortgage payment to income ratio (PIR) is higher than in a month where the index is lower. Contrary to other affordability indexes that make multiple assumptions about mortgage underwriting criteria to estimate mortgage payment level, PAPI directly uses MBA’s Weekly Applications Survey (WAS) data to calculate mortgage payments.
PAPI uses usual weekly earnings data from the U.S. Bureau of Labor Statistics’ Current Population Survey (CPS). Usual weekly earnings represent full-time wage and salary earnings before taxes and other deductions and include any overtime pay, commissions, or tips usually received. Note that data are not seasonally adjusted.
MBA’s Builders’ Purchase Application Payment Index (BPAPI) uses MBA’s Builder Application Survey (BAS) data to create an index that measures how new mortgage payments vary across time relative to income, with a focus exclusively on newly built single-family homes. As with PAPI, higher index values indicate that the mortgage payment to income ratio (PIR) is higher than in a month where the index is lower. To create BPAPI, principal and interest payment amounts are deflated by the same earnings series as in PAPI.
The rent data series calculated for MBA’s national mortgage payment to rent ratio (MPRR) comes from the U.S. Census Bureau’s Housing Vacancies and Homeownership (HVS) survey’s median asking rent. The HVS data is quarterly, and as such, the mortgage payment to rent ratio will be updated quarterly. The HVS data is quarterly, and as such, the mortgage payment to rent ratio will be updated quarterly. MPRR data is not included in December 2024 data.
For additional information on MBA’s Purchase Applications Payment Index, click here.