Last week was a big week for mortgages, sources say, as Federal Reserve Chairman Alan Greenspan's comments focusing on price stability and an encouraging CPI number removed some of the extension concerns in the market, causing a broad-based bid for mortgages late in the week.

"Greenspan indicated a limited series of tightenings rather than a whole program," said an MBS trader. "There was a lot of fear the week before that things were out of control with the Fed tightenings coming up. People had visions of 1994 dancing around in their heads. But now the CPI number and Greenspan's comments relieved some people's anxieties."

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