Home mortgage rates are on the rise, with the thirty-year fixed-rate mortgage reaching a height not seen since the end of 2018. But while these higher interest rates could result in higher monthly mortgage payments for some homebuyers and make it more difficult for others to qualify for or afford a home loan, it could also help tip the market in some buyers’ favor. Historically, higher interest rates have decreased demand for homes, but other factors can also affect the housing market.

The median listing price reached a record high of $405,000 in March 2022. But rising mortgage rates could soften competition for homes, as some buyers may find themselves priced out of a home, especially as other stressors like rising inflation make it more difficult for some buyers to save for a down payment. Despite this rise in mortgage rates, they are still at a historic low.

If you’re thinking about purchasing a home, consider these market factors and strategies.

Rates may continue to rise

Some experts are predicting that mortgage rates will continue to go up in 2022. If you purchase a home now before rates get higher, you could pay less interest over the life of your loan. When rates go up, it can be harder to qualify for a mortgage, and, if you do get a loan, your monthly mortgage payments may be higher. So you may want to shop for a home now before rates rise even more. Interest rate hikes could significantly impact your pocketbook—the mortgage-rate increases seen so far this year for a thirty-year fixed-rate mortgage could translate to an added $200 a month in payments for a $240,000 loan.

Shop mortgage lenders and loans

It’s always a good idea to shop at least three lenders, but it’s even more important as rates rise. You could also try improving your credit score, decreasing your debt, and saving up for a bigger down payment to potentially secure a lower interest rate. It’s important to reach out to lenders to ensure that you can still qualify for a home loan despite today’s higher rates. A shorter loan term, such as a fifteen-year mortgage instead of a thirty-year one, could help you get a lower rate.

The market might withstand stressors

Rising interest rates could soften the housing market, but not necessarily. Homebuilders have been building fewer homes the past few years, which has contributed to rising home prices, low inventory, and falling housing affordability. The COVID-19 pandemic has been a factor too. It caused a labor shortage, higher prices for raw materials, and supply-chain disruptions, all of which make building new homes more difficult. These roadblocks may continue into 2022, continuing to drive up prices. Plus, now that millennials have reached homebuying age, they are contributing to housing demand. On the other hand, low inventory, high home prices, higher gas and grocery prices, and rising interest rates might work in tandem to force some homebuyers out of the market, benefitting those who can stick it out. Plus, worries about political and economic instability in Europe could soften the market. But don’t expect these pressures to cool the housing market anytime soon. You can expect the current boom to last at least through this spring, especially because of the housing market’s significantly low inventory.

Strengthen your position

If home prices remain high while inventory stays low and rates continue to rise, there are ways you as a homebuyer can strengthen your position in the market. If you find that your current homebuying budget can’t get you the home you want, try these tactics:

• Relocate to a more affordable metropolitan area if you can.
• If possible, increase your budget so you can purchase a home that better suits your needs.
• If you can’t increase your budget, consider compromising on home size or amenities.
• Consider dropping important contingencies like a home inspection to strengthen your position as a buyer.

Don’t time the market

As you consider whether to buy a home, remember that’s it’s nearly impossible to get the timing right to buy when market conditions are ideal. Generally, if you are ready to settle down and stay in one place for a few years, it’s usually considered an appropriate time to buy a home, especially if you have a down payment, savings, and job security.