Mortgage rates will rise when the Federal Reserve ends its $1.25 trillion program to purchase mortgage-backed debt, Pacific Investment Management Co.'s Mohamed El-Erian said on CNBC Friday.

"The time has come for the Fed to exit some of this program," said El-Erian, the chief executive and co-chief investment officer of the world's biggest manager of bond funds. "What's critical for the Fed is not to try and offload all the mortgages it has bought into a market that will not be able to absorb it."

The Fed's mortgage-purchasing program is scheduled to end in the first quarter of next year.

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