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“If mortgage rates shift lower in 2024 as we anticipate, the combination of rising inventory levels and lower rates should lead to stronger demand for buying a home,” said Seller.
“Mortgage applications continued their downward trend last week, as mortgage rates reached their highest levels in nearly 23 years,” said Bob Broeksmit, president and CEO of MBA. “Rates over 7% and low for-sale inventory continue to create affordability challenges for prospective buyers. Until rates start to come back down, we anticipate housing market activity will remain slow.”
What are the key findings of the report?
MBA said an increase in the Purchase Applications Payment Index (PAPI), which measures how new monthly payments vary across time, suggests the mortgage payment to income ratio (PIR) is higher, and this could be a result of increasing application loan amounts, rising mortgage rates, or a decrease in earnings.
The national PAPI increased to 175.4 in August, up 0.4%, and thus it is now only two points lower than its record level in May 2023. Median earnings increased by 4.2% year over year, while payments increased by 18.0%, or $331. With strong earnings growth, the PAPI is up 13.2% on an annual basis. The national mortgage payment for borrowers applying for lower-payment mortgages (the 25th percentile) decreased to $1,444 in August.
The Builders’ Purchase Application Payment Index (BPAPI) showed that the median mortgage payment for purchase mortgages increased to $2,609 in August, from $2,526 in the previous month.
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