JohnAlt it hurts you because you qualify for less. Prices never adjust with interest rates, they usually respond a few months AFTER the rate movement. I agree with you buying at a lower price is always better. However your buying power does get reduced unless you have a strong cash component to the purchase, strong being a relative term, because it all depends on the price range of the home you are looking at.

People with stronger cash positions will always benefit greatly from a higher interest rate environment then those that do not.