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Mortgage affordability improved in May: MBA
The Mortgage Bankers Association said that a recent decline in mortgage rates and more inventory to choose from are contributing to lower mortgage payments.
The median monthly payment for purchase mortgage applicants decreased to $2,219 in May, down 1.6% from the prior month, according to data released Thursday by the Mortgage Bankers Association (MBA).
”Homebuyer affordability conditions improved in May as slightly lower mortgage rates and an uptick in housing inventory slightly eased the recent rise in application payment amounts,” Edward Seiler, MBA’s associate vice president of housing economics, said in a statement. “MBA is forecasting for mortgage rates to fall closer to 6.5 percent by the end of the year, which along with rising inventory levels and a subsequent slowdown in home-price growth, should help affordability.”
At HousingWire‘s Mortgage Rates Center on Thursday, the average rate for 30-year conventional loans was 7.08%, down from 7.26% at the end of May.
The national Purchase Applications Payment Index (PAPI) — benchmarked at 100 in March 2012 — fell 1.6% in May to a reading of 173.9. The MBA noted that borrowers applying for ”lower-payment mortgages” — up to the 25th percentile of payment amounts — saw their median monthly payment fall by 1.9% to $1,508 in May.
For new-home purchases, the trade group’s builder application payment index showed a median monthly payment of $2,522 in May, down 3.2% from April.
Across various loan types, conventional loan applicants had a median monthly payment of $2,226 in May, down from $2,271 in April. For Federal Housing Administration (FHA) loan applicants, the median payment dropped from $1,955 to $1,924 during the month.
At the state level, the highest purchase application payment readings last month were in Idaho (262.9), Nevada (258.3), Arizona (231.4), Florida (221.8) and Rhode Island (220.2). The lowest readings were in Louisiana (127.4), Connecticut (131.4), New York (132.2), Alaska (136.8) and West Virginia (139.3). This is a measurement of payment growth since March 2012.
MBA also noted that homebuyer affordability increased for white, Black and Hispanic households alike.
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