Record low mortgage rates can save buyers money when financing a home purchase. But realtor.com® warns that those rock-bottom rates may make it more difficult for first-time buyers in the future.

A shortage of affordably priced homes is causing first-time home buyers to face fierce competition, even during the pandemic and a recession.

But as the economy eventually recovers and mortgage rates rise over the next few years, homeowners who bought or refinanced their mortgages this year may be tempted to hold onto their properties longer. That could then in turn hamper future first-time buyers in their search for starter homes, as their current owners remain in them.

If “rates move up and you want to trade up to a bigger home, you not only have to pay more for the bigger home, but you would also have to pay more to borrow money,” says Danielle Hale, realtor.com®’s chief economist. “That starts to make it less appealing to trade up. There could be fewer entry-level properties for resale. It creates a scarcity of homes for first-time buyers.”

For the week ending July 16, the 30-year fixed-rate mortgage dipped to a record low average of 2.98%, Freddie Mac reports. Those who snag rates that low may face a “locked in” situation, which has been considered a factor for preventing homeowners from moving in the recent past. Black Knight found when looking at rates and home listings from 2013 to 2018 that homeowners who had low fixed-interest rates were the least likely to list their homes for sale.

“Prior to the pandemic, we did see homeowners’ mobility trending lower over the last few years,” Joel Kan, an economist with the Mortgage Bankers Association, told realtor.com®. “We’d also seen an increase in home improvement spending. Low rates could play a part in this increased homeowner tenure.”