MReport April 2022

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56 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA National Median Mortgage Payment Rises Month Over Month New data from the MBA has found that the average monthly mortgage rose over $100 month over month, and over $300 year over year. T he Mortgage Bankers Association (MBA) has launched a new afford- ability index aiming to measure how new mortgage pay- ments vary across time relative to their income. The new monthly index, called the Purchase Applications Payment Index (PAPI), is used because an index can simplify the measurement of changes in the underlying data series over time. While new, the MBA has worked backward to July 2009 in order to give the index a solid starting foundation built on historical data. The PAPI uses data from the MBA's Weekly Applications Survey (WAS) that uses loan-level data on 30-year fixed-rate mortgages to get the loan amount and interest rate needed to calculate monthly loan payments. It then uses data from the U.S. Bureau of Labor and Statistics Current Population Survey (updated quarterly and conducted by the U.S. Census Bureau) and the Employment Situation Report (updated monthly) to find full-time wage and salary earnings before taxes. It also benchmarked the index to 100 with the March 2012 data. It should be noted that the PAPI is a national survey which also provides glimpses into data by race and ethnicity but is limited by WAS data which does not take race/ethnicity into consideration. What drives the index up or down? According to the MBA, the PAPI will increase as mort- gage application loan amounts increase, as interest rates on mort- gages rise, or if earnings decline. On the other hand, the PAPI decreases when loan amounts decrease, interest rates decline, or earnings increase. A component of the index also compares rent levels to mortgage payments. To do this the MBA compares the 25th percentile and median WAS payment level data to rents for each quarter since July 2009 using the U.S. Census Bureau's Housing Vacancies and Homeownership survey to find the median asking rent. So, what did the first PAPI find? The national PAPI increased 8.3% to an index of 146.3 in February 2022 from the 135.1 in January 2022 and from 120.0 the previous February (a 21.9% increase). This is equivalent to a $127 jump in pay- ments month to month and $337 jump from a year ago. "Low unemployment has spurred strong income growth in early 2022, but homebuyer af- fordability has decreased due to the quick rise in mortgage rates amidst steep home-price growth," said Edward Seiler, MBA's Associate VP, Housing Economics, and Executive Director, Research Institute for Housing America. "The 30-year fixed-rate mort- gage spiked 73 basis points from December 2021 through February 2022. Together with increased loan application amounts, a mortgage applicant's median principal and interest payment in February jumped $127 from January and $337 from one year ago." The MBA found the na- tional median mortgage payment

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