Declining Mortgage Affordability Quantified in New Index

Source: National Mortgage News (subscription may be required)

Affordability for home buyers decreased in February by 8.3% from the month before, according to a new monthly metric from the Mortgage Bankers Association that quantifies the change resulting from rising interest rates and higher home prices.

The Purchase Applications Payment Index for February was 146.3, up from 135.1 in January (the previous index high point) and 120 for February 2021. The base month of PAPI is March 2012, with the value set at 100. It measures the borrower's mortgage-payment-to-income ratio and a higher index means affordability is less than the comparative period.