Higher payment for purchase mortgages offsets gain in earnings.
Mortgage payments in June remained relatively unaffordable for most homebuyers due to elevated rates and home prices, according to the Mortgage Bankers Association.
MBA’s latest Purchase Applications Payment Index (PAPI) showed that borrower affordability was essentially flat in June, with the national median payment applied for by purchase applicants dropping 0.1% to $2,162. While the index decreased slightly, it remained at high levels.
Payments spiked 14.2% year over year, offsetting the 5.7% annual gain in median earnings. Meanwhile, the national mortgage payment decreased slightly to $1,459 in June from $1,462 in May for borrowers applying for lower-payment mortgages (the 25th percentile).
“Homebuyer affordability is still strained this summer, with mortgage rates remaining high and volatile, and home prices high because of low inventory,” said Edward Seiler, associate vice president of housing economics at MBA.
Seiler noted that the median purchase application amount fell from $330,000 to $326,000 in June, which he said is a “positive sign that home prices are stabilizing. An ongoing combination of flattening home prices and lower rates would offer reprieve for households who are looking to buy a home.”
The new S&P CoreLogic home price index was up 0.7% nationally, continuing the slowdown of the last few months. The gains come as long-term mortgage rates hover around 6% to 7%. According to Freddie Mac, the 30-year fixed-rate loan averaged 6.78% as of July 27.