Today’s news won’t help. The Federal Reserve raised its benchmark interest rate by another 0.75% Wednesday, the fifth hike this year, in an attempt to ease inflation. That will affect adjustable-rate mortgages and home equity lines of credit, and potentially boost mortgage rates for 15- and 30-year fixed loans indirectly.

“Inflation is still running hot and is not easing as fast as expected,” Greg McBride, chief financial analyst at Bankrate.com, said in a statement. 

The average 30-year fixed mortgage rate jumped to 6.47% this week. That’s the highest since 2008, and is more than double the average rate from a year ago. 

Housing, especially rent, is one of the largest drivers of the inflation increase, which hit 8.3% in August compared to a year ago, according to the U.S. Bureau of Labor Statistics. While price increases for things like gasoline and airfares are slowing, housing costs are actually increasing at an accelerating rate. 

This is especially harmful for home buyers because inflation and high mortgage rates are working to dwindle their purchasing power. When rates rise, the same home will cost buyers more than it would have at a lower interest rate, forcing first-time buyers to rejigger their budgets, says John Cooper, a certified financial planner and former mortgage lender in South Carolina. 

Some are priced out completely, while others lose their mortgage eligibility when they can no longer meet lenders’ strict debt-to-income ratios.

For instance, a 30-year mortgage rate of 3% on a $350,000 house with a 3.5% down payment has a monthly mortgage payment of $1,423, not including taxes and fees. All else the same, a 6.5% mortgage rate increases your monthly payment to $2,134, equating to an additional $255,960 over the life of the loan, according to Bankrate. 

First-time homebuyers with Federal Housing Administration (FHA) loans are also facing higher rates. The 30-year fixed rate mortgages backed by the FHA—which are intended to help low- and moderate-income first-time buyers by lowering down payments and closing costs—increased from 5.61% last week to 5.71%, according to the Mortgage Bankers Association’s weekly survey. 

All this said, buyers dropping out of the market could be a boon for first-time buyers who can afford to keep shopping the limited inventory.

What first-time homebuyers can do now

This monthly price difference has many potential buyers questioning whether they should try to buy now—or wait for lower rates. No one can time the market, but things may get better for buyers, if they can afford rising rents.

“My belief is that mortgage rates will be lower in 12 to 24 months,” says Cooper. “If a homebuyer is willing to wait, the mortgage environment most likely will improve, meaning lower interest rates, during that time.” 

Since first-time buyers don’t have equity from a home sale to compete with repeat buyers, they can also use this time as an opportunity to save up a larger down payment. If they can save 20% of the purchase amount, buyers can avoid taking out private mortgage insurance which could save the buyer hundreds of dollars each month, says Cooper.

While today’s news might seem like more discouragement for first-time buyers in an already stressful market, those still set on purchasing their dream home should consider applying for a mortgage pre-approval to show that they are a serious and prepared buyer, says Tom Goyda, senior vice president of consumer lending for Wells Fargo. 

A pre-approval can also give the buyer a more accurate idea of their potential loan amount, monthly payment, and interest rate so they can begin budgeting for their monthly expenses. 

Overall, the most important thing a buyer can do is make sure they can comfortably afford their monthly mortgage payments.