Fed stretching out mortgage purchases

Program has kept interest rates low

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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.