The Federal Reserve will stretch out purchases of mortgage-backed securities that have helped keep mortgage rates low, extending the $1.25 trillion program’s sunset from the end of this year to to March, 2010.

Mortgage market observers welcomed the move, saying the Fed would have been hard pressed to use up by the end of the year the program’s remaining capacity for more than $600 billion in MBS purchases, the Associated Press reported.

The Federal Reserve will stretch out purchases of mortgage-backed securities that have helped keep mortgage rates low, extending the $1.25 trillion program’s sunset from the end of this year to to March 2010.

Mortgage market observers welcomed the move, saying the Fed would have been hard-pressed to use up by the end of the year the program’s remaining capacity for more than $600 billion in MBS purchases, the Associated Press reported.

The Fed made a similar decision in August to draw out the planned purchase of $300 billion in Treasury securities through the end of October, rather than ending the program in September as planned (see story).

Since then, there’s been further improvement in financial markets and activity in the housing sector has increased, the Federal Open Market Committee said in announcing a decision to maintain the target for the federal funds overnight rate at zero to 0.25 percent.

Although economic activity is "likely to remain weak for a time," the committee anticipates strengthened economic growth and "a gradual return to higher levels of resource utilization," with inflation "subdued for some time."

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×