The national median monthly payment for purchase applications decreased from $2,057 in August to $2,041 in September, according to the Purchase Applications Payment Index (PAPI) maintained by the Mortgage Bankers Association (MBA).

The index measures the variation of new monthly mortgage payments relative to income based on data from MBA’s Weekly Applications Survey, serving as a gauge for measuring homebuyer affordability. A decrease in the PAPI indicates improving borrower affordability conditions, occurring when loan application amounts drop, mortgage rates decline, or earnings rise.  

Edward Seiler, associate vice president for housing economics at the MBA, noted that affordability conditions have now improved for five straight months, attributing the trend to mortgage rates nearing the low 6% range. Interest rates fell by 31 basis points from August, adding up to a total drop of 100 bps since April.

Falling rates helped bring the PAPI to a reading of 157.9 in September, down 0.8% monthly and 9.1% annually. All but 10 states saw a monthly decrease in PAPI.

“Overall affordability is now at its highest level since August 2022, but the recent jump in rates will likely cause conditions to plateau. MBA is forecasting for rates to be around 6.3 by the end of the year,” Seiler said.