July Mortgage Rates Could Follow House Prices Downward

This article was first published on NerdWallet.com.

July mortgage interest rates forecast: down slightly

Mortgage rates are poised to edge lower in July as inflation cools.

We're not talking about a steep rate decline. Picture a gentle slope, like the uneven floor of a 150-year-old house, where a dropped marble rolls, but slowly.

It appears that mortgage rates peaked for the year in May. We won't know for sure until the end of December, but the trend has been downward. The 30-year fixed-rate mortgage averaged 7.22% in the first week of May, according to Freddie Mac's weekly survey. It fell to 6.86% in the last week of June.

The gradual rate decrease was accompanied by declining inflation. From March through May, the core consumer price index fell from 3.8% to 3.4%. Mortgage rates tend to drop when the inflation rate falls. So if inflation continues to diminish, mortgage rates might keep falling.

Listening to the Fed

The Federal Reserve wants to push the inflation rate down to 2%. To that end, the central bank raised short-term...