With the Federal Reserve's purchases of mortgage-backed securities done, investor demand for the debt will keep home-loan rates low in the U.S., according to Pacific Investment Management. Scott Simon, an executive at Pimco, said the Fed's $1.25 trillion program kept housing prices from plunging further. "If and when we see mortgages cheapen, we expect to see private institutions stepping in to buy," Simon said. "We continue to believe that lower-priced homes bottomed last year. Higher-priced homes should bottom later this year."
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