MORTGAGE RATES CLIMB TO 22-MONTH HIGHS. CRASH ALERT?

U.S. mortgage rates rose last week for the third consecutive week to their highest since March 2020 when the COVID War began, The Wall Street Journal reported.
The average rate for a 30-year, fixed-rate loan moved up to 3.45 percent on 13 January, compared to 3.22 percent the week before and 2.79 percent a year earlier, according to the Federal Home Loan Mortgage Corp (Freddie Mac).
Strong demand for homes drove the median sale price to $353,900 in November, up 13.9 percent in a year, according to the National Association of Realtors. The median December price jumped to $382,900, the online brokerage Redfin said (see related story in this issue).
“Given the fast pace of home price growth, [higher rates] will likely dampen demand in the near future,” Freddie Mac’s chief economist Sam Khater told the WSJ.
Mortgage payments as a proportion of income have become less affordable than at any time since 2008 at the beginning of the Great Recession, according to a report by the Federal Reserve Bank of Atlanta.
A year ago, Americans were devoting about 29 percent of household income to mortgage payments on a median-priced home; in October, the figure was 33 percent, the bank reported.
TREND FORECAST: We maintain our long-standing forecast that when the U.S. Federal Reserve raises interest rates to, and then beyond, 1.5 percent, housing sales will contract sharply. 
While real estate values will fall, minus a wild card event, we do not anticipate a real estate collapse. 
However, on the commercial real estate front, with a sizable percentage of people disgusted with wasting much of their life commuting and demanding to work-at-home full or part time, this will put increasing downward pressure on the commercial real estate sector, particularly in the office occupancy sectors.