Happily surprising many consumers, mortgage interest rates slowly but steadily dropped through August. By September 1, the average rate for a 30-year fixed-rate mortgage had lowered to 6.44 percent, with an average 0.4 point (fees), according to Freddie Mac, a major buyer of existing home mortgages. Thats the lowest rate for 30-year fixed mortgages since the week ending April 6 of this year and is good news for prospective home buyers and homeowners who want to refinance their mortgage.

Mortgage rates continue to drift lower in large part because of cooling in the housing market and in consumer confidence. Its giving financial markets reason to believe that economic growth will moderate and inflation will remain in check, said Frank Nothaft, Freddie Macs chief economist. As a matter of fact, the 30-year fixed mortgage is nearly 40 basis points lower than its peak of 6.8 percent in July of this year. By some indicators, personal incomes are growing faster than the cost of housing. Combined with the still historically low mortgage rates, this will help support the housing industry as it levels off from the record highs of the last few years.