Industry NewsMortgage

Fed lets short-term rate stand

Mortgage rates expected to rise

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Deterioration in job markets is abating and economic activity has picked up but is likely to remain weak for a time, the Federal Reserve said in leaving its target for a key short-term interest rate at zero to 0.25 percent.The housing sector "has shown some signs of improvement over recent months," and household spending "appears to be expanding at a moderate rate," the Federal Reserve Open Market Committee said in announcing its decision to leave the federal funds overnight rate unchanged.While the Fed is expected to start raising short-term interest rates if signs of inflation emerge, the economy remains constrained by a "weak labor market, modest income growth, lower housing wealth, and tight credit," the committee said.The Fed said it remains committed to continuing through March a program credited with keeping rates on mortgages low. The Fed is purchasing $1.25 trillion of mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae, an...