Homebuyer affordability is no longer a silver lining



Affordability for homebuyers, silver lining in a chilled housing marketsuffered a huge blow in September as soaring mortgage rates led to higher monthly payments.

According to Mortgage Bankers Association (MBA).

MBA’s PAPI, which measures the change in monthly new mortgage payments relative to income, rose 5.5% to 163.6 in September from 155 in August, reversing a four-month straight decline from a high of 164.2 in May.

A decline in the MBA PAPI, indicating worsening borrower affordability conditions, means that the mortgage payment-to-income ratio is lower due to lower demand loan amounts, mortgage rates, or an increase revenues.

“Homebuyer affordability took a huge hit in September, with the 75 basis point jump in mortgage rates, pushing the typical homebuyer’s monthly payment up $102 from the month of August,” said Edward Seiler, associate vice president of housing economics and MBA executive director. Housing Research Institute of America.

The average 30-year fixed rate mortgage on Thursday was 7.07%, Daily Mortgage News show. Mortgage rates this week averaged 7.08%, according to Freddie Mac.

How lenders can leverage credit to help make homeownership more affordable

With interest rates now at 14-year highs, the cost of home ownership is becoming an issue for most potential buyers. HousingWire recently spoke with Mike Darne of CreditXpert about how mortgage lenders can leverage credit to help make home ownership more affordable.

Presented by: CreditXpert

Potential buyers remained on the sidelines as it became more difficult to buy homes, as evidenced by September single-family home sales. After rebounding in August after falling in July, sales of new single-family homes in september were at a seasonally adjusted annual rate of 603,000, down 10.9% from August and down 17.6% from a year ago, according to the US Department of Housing and Urban Development (HUD) and the United States Census Bureau.

Despite the slowing pace of sales, the median sale price for a new home rose to $470,600 in September from $436,800 in August.

With mortgage rates continuing to rise, borrowers’ purchasing power is diminishing, Seiler said. The median loan amount in September was $305,550, well below the February high of $340,000.

Insufficient inventory, affordability constraints and economic uncertainty will continue to hamper the procurement market, Seiler added. Purchase volume is expected to decline 3.3% in 2023 to $1.53 trillion, according to the MBA.

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