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Higher Rates Won't Derail Housing Recovery: BofA Merrill Lynch

Buying remains cheaper than renting nationally so long as interest rates remain below 10.5% -- a level not seen since the 1980s.

In pricy metro areas such as San Jose, Calif., the tipping point is lower at 5.2%. In the New York-New jersey area, the math would likely change in favor of renting if rates were to rise to 6.8%.

Meanwhile, the Mortgage Bankers Association reported early Thursday that mortgage applications rose last week despite the rise in rates. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 14 percent compared with the previous week and was 6 percent higher than the same week one year ago.

-- Written by Shanthi Bharatwaj New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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