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Mortgage-backed securities providing new housing funds

The popularity of mortgage-backed securities is providing a new source of funds for the housing market, according to the Federal Home Loan Mortgage Corporation (Freddie Mac).

It reports that mortgage sales have grown from $50.7 billion in 1977 to $163 billion in '83 and trading of mortgage-backed securities has expanded from $131 billion in 1981 to $506 billion in '83. Even so, notes economist Kevin Villani, home buyers must still obtain a mortgage loan from their local lender.

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The money will be plentiful, but mortgage interest rates will still be high, Mr. Villani says, since the overall capital markets from which the mortgage-backed securities are drawn will still have rising rates. He predicts long-term, fixed-rate mortgages to exceed 15 percent next year.

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