A homebuyer would lose $23,250 in spending power with a mortgage rate of 3.25% versus a 2.75% rate, where they were sitting late last year and early this year. At a 3.25% interest rate, a homebuyer can afford a $506,000 home on $2,500 per month, down from the $529,250 they could afford on the same budget with a 2.75% rate. To put it another way, the monthly payment on a $506,000 home would rise $110 with the higher mortgage rate, from $2,390 to $2,500.

Interest rates started to rise in mid-February after 30-year fixed mortgage rates reached a record low of 2.65% in the beginning of January, a continuation of five months of sub-3% rates as the Fed worked to stimulate the economy during the pandemic-driven recession. Partly as a result of record-low rates, home prices rose a near-record 14% year over year in January. The average mortgage rate hit 3.02% in the week ending March 4–the first time it has risen above 3% in seven months–and is likely to continue to increase, at least slightly, as the economy recovers.

Growth in the number of homes that have gone under contract has started to slow in recent weeks, but it’s too early to tell whether the trend is a result of winter storms, a shortage of homes for sale, or rising mortgage rates or whether the trend is likely to continue into spring or not.

“If the $1.9 trillion economic stimulus package that’s set to provide cash relief to Americans and get people back to work is successful, interest rates are likely to inch back up to pre-pandemic levels of about 3.5%. That would alter the dynamics of the housing market, though it wouldn’t necessarily put a damper on it,” said Redfin Chief Economist Daryl Fairweather. “The financial relief coming to families earning less than $150,000 will give more of them the desire and means to buy a home. That will result in more demand for affordable homes. That’s different from what we’re seeing now, which is a housing market driven by wealthy people purchasing relatively expensive homes. Higher mortgage rates will also make buyers more price conscious and less likely to bid 10% or more over asking, so we could see some of the intense competition slow down.”

Forty-four percent of respondents to a recent Redfin survey said mortgage rates rising above 3.5% would have no impact on their homebuying plans, while 10% would cancel their plans to buy a home.

“The small increase in mortgage rates has had zero impact on buyers so far,” said Seattle Redfin agent Ben Stanfield. “Rates are still historically low and they’re still keeping buyers in the market. Even though rates are creeping up, they’re not increasing nearly as quickly as home prices. If you can buy, it’s a good idea to buy now before homes become even more expensive.”

With a 3.25% interest rate, 68.4% of homes nationwide that were for sale any time between January 26 and February 25 were affordable on a $2,500 monthly budget. With a 2.75% rate, 70.1% of homes were affordable on that budget.

The interactive chart below shows how much a homebuyer can afford to spend at different mortgage interest rates, with each line representing a different monthly payment.