This extraordinary situation naturally begs the question “why”
Traditionally, such drastically low long-term interest rates are a sure signal that financial markets expect a recession in the years ahead. This is why Central Banks are cutting interest rates, to avoid recession, drive demand and push up prices.
There are a number of financial and economic consquences for taking such action with interest rates. [Some of these are outlined clearly and intellegently in the pieces by David McWilliams and The Finacial Times below.]
We shall focus on one of the consequences.
Demand for housing will rise. It is, after all, the main capital asset that most people use. Houses will behave like assets in fixed or short supply, and rise in price.
And the cost of renting those houses will rise as well.
But as interest rates remain low, so too will mortgage rates.
So, in such a housing market, it makes more economic sense to be a home owner and not a house renter.