What exactly is the effect of rising interest rates?? For those people who have been pre-qualified, as interest rates increase their buying power decreases. Each quarter of a % in increase decreases buying power by approximately $5000. Consequently if rates rise 1% and a buyer qualified for a $200,000 home at 4.5%, that same buyer would qualify for a $180,000 home at 5.5%. In our minds, this is a very good reason to buy now if you're sitting on the fence. Call us. We're ready to show you your dream home.