What household debt crisis? 1 in 3 US homebuyers paid 100% with cash to avoid soaring mortgage rates — the biggest figure since 2014. Here's what it means for hopeful home buyers

High rates coupled with high prices have deterred plenty of prospective buyers from entering the market — overall home sales plunged 41% from last April in the metros included in this analysis.

That’s not to say all-cash buyers haven’t been affected by higher mortgage rates, however. All-cash sales were also down 35% compared to last year.

“A home buyer who can afford to pay in all cash is weighing two potential paths,” Redfin senior economist Sheharyar Bokhari says in the report. “They can use cash to pay for the home and avoid high monthly interest payments, or take out a loan and pay a high mortgage rate.”

Bokhari explains buyers can put the funds from an all-cash purchase into investing in other assets that offer bigger returns instead, “which could partly cancel out their high mortgage rate.”

On the other hand, buyers who can’t afford to pay in all cash may either make do with higher rates or completely back out of the housing market.

“That discrepancy is the reason the all-cash share is near a decade high even though all-cash purchases have dropped,” says Bokhari. “Affluent buyers have the choice to pay cash instead of dropping out of the market.”