How do high mortgage rates affect affordability for first-time buyers?

High mortgage rates significantly affect affordability for first-time buyers by increasing monthly payments. When rates rise, the cost of borrowing becomes more expensive, meaning buyers need to either borrow less or pay more each month for the same home. This makes it harder for first-time buyers, who typically have smaller down payments and less financial cushion, to afford a home. In many cases, higher mortgage rates may push them out of certain price ranges or force them to compromise on home size, location, or condition. Additionally, higher rates can reduce their purchasing power, as lenders may approve them for lower loan amounts due to stricter affordability criteria. As a result, many first-time buyers may delay their home purchase or look for alternative options like renting or exploring less expensive markets.