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Fed's Rosengren sees mortgage rate rise in spring

By Owen Weldon     Jan 9, 2010 in Business
Home loan rates in the USA could rise by as much as three-quarters of a percentage point in the spring as the federal reserve ends its mortgage bonds purchase program.
Boston Federal Reserve Bank President Eric Rosengren told sources that people maybe would have thought that they would have seen rates move up more quickly than they have but nonetheless it is a concern.
The first week of January thirty-year mortgage rates averaged 5.09 percent, according to mortgage finance company Freddie Mac.
The fed is set by the end of March to end the $1.25 mortgage-backed securities purchase program which was put in place to bring down mortgage rates and to support the struggling housing market in order to bring it out of its worst slump in decades.
Rosengren is a voter on the fed's policy-setting panel this year and he says that the fed could extend the the program if the economy deteriorated dramatically but that is very unlikely.
He said that it is not in their forecast and they are not expecting the economy to deteriorate dramatically.
Rosengren is considered one of the more dovish fed officials on inflation. He reiterated his view that low inflation meant the fed did not need to rush to raise interests rates.
On Friday Rosengren told sources that until inflation goes back up to 2 percent, there is plenty of room to wait and see how the economy progresses.
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