This article was first published on NerdWallet.com.
Mortgage rates have fallen four months in a row, and they'll probably go down in September and extend the streak to five months. There are two related reasons: Inflation is subsiding, and the Federal Reserve is about to reduce short-term interest rates.
Before getting into what's expected in September, let’s pull out the megaphone to cheer for the progress mortgage rates have made in less than a year:
The inflation rate tumbled over a similar period. The consumer price index fell from 3.2% in October to 2.9% in July (the most recent data available). Inflation usually cools when unemployment rises, and that's what has happened. The unemployment rate rose from 3.8% in October to 4.3% in July.
"Inflation has declined significantly. The labor market is no longer overheated," Federal Reserve Chair Jerome Powell said in an Aug. 23 speech.
The combo of falling inflation and rising unemployment has pushed mortgage rates lower and convinced the Fed that it should cut short-term interest rates sooner rather than later to prevent too many job losses. "The time has come for policy to adjust," Powell proclaimed in the Aug. 23 speech....
