In mid-September, Ben Bernanke surprised the nation by announcing the Federal Reserve’s decision to extend its support of the mortgage market. In May, the Fed had indicated it might be scaling back on its purchase of mortgage-backed securities which led to a two-year high in mortgage rates.
The about-face has been hailed as a “temporary tonic for the real estate market”. It certainly gave homeowners a boost in New York City, where it’s still approximately 20% cheaper to purchase than to rent.
30-year mortgage rates currently stand at 4.5%. They’d have to rise to 7.5% to tip the balance in favor of renting versus buying.