Mortgage payments drop in August, giving buyers modest affordability gains

Homebuyer affordability improved modestly in August as the median monthly mortgage payment for purchase applicants fell to $2,162, down from $2,175 in July, according to the Mortgage Bankers Association (MBA)’s latest Purchase Applications Payment Index (PAPI). The index measures changes in mortgage payments relative to borrower income. The index fell 0.6% to a reading of 154.3 in August, down from 155.2 in July. Affordability also improved from a year earlier. Mortgage payments rose 2.9% during the past 12 months, but household earnings increased 4.1%, pushing the PAPI down 1.1%. “Homebuyer affordability improved slightly in August, as a decline in the median purchase loan amount helped offset the impact of higher mortgage rates,” Edward Seiler, MBA’s associate vice president of housing economics and executive director of the Research Institute for Housing America, said in a statement. Seiler said affordability remains challenging, with 27 states recording declines in August. He said sustained improvement will depend on lower mortgage rates, continued income growth and slower home-price growth. The median mortgage payment for borrowers applying for lower-payment loans, those at th...