Fed keeps hammer down on mortgage rates

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In a bid to keep mortgage rates low, the Federal Reserve said Wednesday it will boost purchases of mortgage-backed securities this year to as much as $1.25 trillion -- a $750 billion increase from a previous commitment. The move is part of a $1.15 trillion expansion of the Fed's balance sheet that's intended to encourage borrowing and revive the economy. Having effectively slashed short-term interest rates to zero, the Federal Open Market Committee is resorting to other means to stimulate growth. In addition to stepping up purchases of mortgage-backed securities, the Fed said it would purchase up to $300 billion in long-term Treasury securities over the next six months, and doubled a previous commitment to buy $100 billion in debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The move should give would-be homebuyers and those seeking to refinance confidence that mortgage interest rates will stay low for months to come. So far, the Fed has used up on...