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Fed renews push for lower mortgage rates

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Editor's note: this story has been updated.The Federal Reserve will attempt to put a tailwind behind the housing sector by purchasing $40 billion a month in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac, a move that's intended to keep downward pressure on interest rates.Under the third round of "quantitative easing," or QE3, announced today, the Fed will also continue to reinvest principal payments from its holdings of Fannie and Freddie debt and MBS. Wrapped up in 2010, the Fed's first round of quantitative easing -- $1.25 trillion in purchases of Fannie and Freddie debt and MBS -- helped push mortgage rates below 5 percent. The European debt crisis has kept demand for government-guaranteed MBS -- seen as a safe haven by investors -- high.After the Fed's announcement, Bankrate mortgage blogger Holden Lewis said on Twitter, "I've never seen mortgage bond yields this low. We might see the lowest 30-year rates ever in coming days."Newsweek Daily ...