(SPONSORED) — As interest rates continue to rise, investors are becoming a larger proportion of home buyers. Tatiana Bailey, Director of the UCCS Economic Forum, explains how this is impacting first-time home buyers.

Bailey explains that there are various indicators nationwide showing a slowdown in the housing market. She said that this is due to the increase in the 30-year mortgage rate, which is now hovering around 7%, more than double what it was a year ago.

Bailey said that she doesn’t think we are going to see a housing crash as we saw during the Great Recession. Bailey explains this is due to the housing shortage that is happening nationwide, which is about 6.4 million units nationwide with a local shortage of about 12,000.

“The shortage in housing does not change the fact that even a one percentage change in mortgage lending rates can cause would-be homebuyers to pull back in plans to buy a home,” said Bailey.

The change in interest rates impacts first-time home buyers the most. People who rent now have to pay more, which results in them having less to save for a down payment, explained Bailey. The other thing is that many of the buyers are investors, who are buying homes to rent out.

Bailey said that investors are buying 35% of homes, and explains that investors know they can rent those homes, and they have the advantage of buying with cash, so they don’t have to pay the higher interest rate.

Bailey said that the “somewhat” good news is that experts are saying that prices will probably go down about 5.5% in the next year.

“I try to tell first-time homebuyers that if they have any way to buy a home, that they can use a shorter term loan like a five or seven-year arm until 30-year mortgage rates come back down,” said Bailey.