The average interest rate on a 30-year fixed-rate mortgage hit 6.7% last week, according to the federal home loan mortgage corporation. That’s more than double the rate at the beginning of the year.

Rising mortgage rates are mostly bad news for would-be homebuyers. But for all-cash buyers and institutional investors, it’s an opportunity.

Last quarter about 35% of all single-family home and condo sales were all-cash transactions – an eight-year high.  And that rate is only likely to go up, said Rick Sharga with housing data provider Attom Data Solutions. 

“Going forward if you’re able to buy a property with cash, you’re in a position of extreme competitive advantage over somebody who’s going to have to finance a purchase with mortgage rates at 6 or 7%,” he said.

The majority of all-cash buyers are humans – think the proverbial moms and pops buying a rental property, or those retirees who use the windfall from selling the New York condo to get the beach house in Boca. 

But institutional investors like private equity firms are also major players in cities like Atlanta and Phoenix.

“They’re sitting on a lot of capital right now. And it’s very likely that when home prices do start to go down, we will see a return of those investors coming into the market,” Sharga said.

Those investors tend to target starter homes: the three-bedroom, two-bath single-family residences they can rent to young families. 

If those young families want to compete with their own all-cash offer, the lucky ones might be able to withdraw from “the bank of mom and dad. And for some it is a loan and for some it’s a gift,” said Jessica Lautz with the National Association of Realtors. 

Of course, most first-time homebuyers don’t have that luxury. And Lautz said in a cooling market, sellers will be even more inclined to accept all-cash bids.

“I do think that there’s inequality in the housing market and this creates a market of haves and have nots,” she said.

Single-family homes built for rent is a small but growing share of the new home market, said economist Rose Quint with the National Association for Home Builders. 

“It allows the buyer, the households, to live in a single family home, even though they cannot afford to buy one. While they save for the down payment, or while the interest rates come down,” she said.

Quint added that the affordability crisis won’t get any better in the long-term until more housing is built. But her forecast predicts fewer newly constructed homes coming to market this year and next.