Morning Business Report: mortgage rates drop, inflation pushes prices higher

Mortgage rates fell sharply this week, marking the largest weekly drop in a year, according to mortgage buyer Freddie Mac.

(LILA MAX)- Mortgage rates fell sharply this week, marking the largest weekly drop in a year, according to mortgage buyer Freddie Mac. The latest Primary Mortgage Market Survey showed the average rate on a 30-year fixed mortgage slipped to 6.35%, down from 6.5% last week. Applications for mortgages, including refinancing, also increased.

At the same time, consumers continue to face higher prices across a range of goods. August inflation data showed increases in food, cars, clothing, and airfare. Virtually all grocery categories are more expensive than a year ago, with coffee up 21% year-over-year and more than 3% in just the past month. Gasoline prices also rose last month.

Despite the inflationary pressures, stocks surged Thursday. Wall Street cheered the August data as a sign the Federal Reserve may cut interest rates in September. The Dow Jones Industrial Average climbed 617 points, hitting a record high.

In the airline industry, Southwest CEO Bob Jordan said the company is weighing long-haul international flights and premium airport lounges as part of its turnaround strategy. The airline has acknowledged it loses customers to competitors who fly to destinations like London or offer premium perks. Jordan said Southwest is also exploring partnerships worldwide to strengthen its global reach.

Meanwhile, a new survey from Talker Research, commissioned by CheapCaribbean Vacations, found that many Americans toss aside rules while on vacation. Two-thirds of respondents admitted to eating out for every meal while traveling, while nearly a quarter said dessert with every meal was the norm. Everyday routines — like making the bed or checking emails — are often abandoned as well.