Ben Bernanke’s surprise decision to extend the Federal Reserve’s support for the mortgage market provides a further boost for homebuyers in New York City, where buying a home is still 20 percent cheaper than renting one.
Mortgage rates reached a two-year high last month, after the Fed’s initial remarks in May that it may scale back on the purchase of mortgage-backed securities.
But with the Fed’s announcement Wednesday – seen as a temporary tonic for the real estate industry — the rates may reverse their course, according to Trulia’s chief economist, Jed Kolko.
“If rates rise more slowly or even fall because of the Fed’s decision, it would take longer to reach the tipping point when renting starts to become cheaper than buying,” Kolko told Bloomberg News.
For renting in New York to become cheaper than buying, 30-year mortgage rates would need to rise to 7.5 percent, according to Bloomberg. The rate currently stands at 4.5 percent. [Bloomberg News] — Hiten Samtani