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BP says it will become operator of the development, adding that it has “the potential to be one of the largest renewables and green hydrogen hubs in the world.”
Hydrogen, which has a diverse range of applications and can be deployed in a wide range of industries, can be produced in a number of ways.
The other shareholders in the Asian Renewable Energy Hub are InterContinental Energy, CWP Global and Macquarie Capital and Macquarie’s Green Investment Group.

A BP logo photographed in London on May 12, 2021. The International Energy Agency recently reported that 2021 saw energy-related carbon dioxide emissions rise to their highest level in history.
Glyn Kirk | Afp | Getty Images

Oil and gas supermajor BP has agreed to take a 40.5% equity stake in the Asian Renewable Energy Hub, a vast project planned for Australia set to span an area of 6,500 square kilometers.
In an announcement Wednesday, BP said it would become the operator of the development, adding that it had “the potential to be one of the largest renewables and green hydrogen hubs in the world.”

Located in the Pilbara region of Western Australia, it’s envisaged the project will develop up to 26 gigawatts of combined solar and wind generating capacity.
The idea is that the hub would provide power to local customers. The hydrogen and ammonia would be used in Australia and exported internationally.
“At full capacity, AREH is expected to be capable of producing around 1.6 million tonnes of green hydrogen or 9 million tonnes of green ammonia, per annum,” BP said.
The firm said it would assume operatorship of the project on July 1, adding that this was “subject to approvals.”
Shares of London-listed BP traded 1.2% lower on Wednesday afternoon.

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Hydrogen, which has a diverse range of applications and can be deployed in a wide range of industries, can be produced in a number of ways. One method includes using electrolysis, with an electric current splitting water into oxygen and hydrogen.
If the electricity used in this process comes from a renewable source such as wind or solar then some call it “green” or “renewable” hydrogen. Today, the vast majority of hydrogen generation is based on fossil fuels.
BP’s announcement did not disclose the amount it was paying for its stake in the AREH project. The other shareholders are InterContinental Energy, CWP Global and Macquarie Capital and Macquarie’s Green Investment Group. Their stakes are 26.4%, 17.8% and 15.3%, respectively.
While Wednesday’s news is a shot in the arm for the Asian Renewable Energy Hub, the project’s development has not been without its challenges, including a June 2021 decision from authorities.

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Anja-Isabel Dotzenrath, BP’s executive vice president of gas and low carbon energy, said the Asian Renewable Energy Hub was “set to be one of the largest renewable and green hydrogen energy hubs in the world and can make a significant contribution to Australia and the wider Asia Pacific region’s energy transition.”
A major producer of oil and gas, BP says it’s aiming to become a net-zero company by the year 2050 or before. It’s one of many major firms to have made a net-zero pledge in recent years.
While such commitments draw attention, actually achieving them is a huge task with significant financial and logistical hurdles. The devil is in the detail and goals can often be light on the latter.
Fossil fuels remain a key part of the global energy mix and companies continue to discover and develop oil and gas fields at locations around the world.

More from CNBC Climate:

In March, the International Energy Agency reported that 2021 saw energy-related carbon dioxide emissions rise to their highest level in history.
The IEA found energy-related global CO2 emissions increased by 6% in 2021 to reach a record high of 36.3 billion metric tons.
U.N. Secretary-General Antonio Guterres on Tuesday slammed new funding for fossil fuel exploration, describing it as “delusional” and calling for an abandonment of fossil fuel finance. More

Summer travel talk sure isn’t what it used to be.
Rather than sun, sand and surf, many travel discussions now center on inflation, rising fuel costs and flight cancellations, a situation which could derail a much-needed 2022 summer travel comeback.

Travel conversations on Twitter decreased 75% from April to May, while discussions related to gas prices and travel — half of which were negative — climbed 680% on the website from the winter months into the spring, according to the social media analytics company Sprout Social.
Yet despite the potential problems ahead, the outlook for summer travel remains strong, said industry insiders, with many travelers saying they’re concerned but undeterred about their upcoming plans.

Are travelers canceling plans?

No, said James Thornton, CEO of Intrepid Travel, a Melbourne-based travel company which focuses on small group adventure vacations around the globe.
He said the company hasn’t seen higher cancellation rates this summer.
“In the last few months, global concerns about shortages, sanctions and higher costs have had economists sounding alarms,” said Thornton. “Despite the rise in costs, travel bookings have more than doubled.”

David Mann, chief economist at the Mastercard Economics Institute, said higher prices won’t stop travelers this summer, especially in parts of the world that have recently reopened, such as Asia-Pacific.
“Think of it literally like a pressure cooker where you are lifting up the lid and the steam is coming out hot,” he told CNBC’s “Squawk Box Asia” in May. Inflation “does matter, but that’s only after we’ve had some of that release of the pent-up demand.”
A new survey indicates Singaporeans, for example, aren’t willing to sacrifice their summer travel plans in the face of rising costs. Despite 77% indicating they were either “extremely” or “very” concerned about rising costs, nearly 40% more people plan to travel this summer than in the last, according to a Tripadvisor Travel Index released in May.
Nearly two in three Singaporeans said they’d be willing to spend less on dining out and clothing to fund their travel too.
Conversely, travel resiliency may be less robust in places where pent-up demand has dissipated some, such as Europe and North America.
According to a March survey published in the Country Financial Security Index Report, nearly a quarter (23%) of Americans indicated plans to cancel or put off travel plans in response to inflation.
Still, Americans are expected to travel in large numbers this summer. More than half (55%) say they’re traveling for the Fourth of July holiday, according to a survey by the travel website The Vacationer — an 8% increase over last year’s survey, the company said.  

Changes, not cancellations

“More people are pivoting their plans to accommodate price hikes and additional costs, rather than canceling [travel] altogether,” said Eric Bamberger, senior vice president of hospitality at the marketing technology company Zeta Global. 
Demand for “pampering” travel, such as spas, is rising, while interest in “educational” travel to museums and national parks is down by more than 50%, according to a Zeta Global company representative.
Car rentals are declining, with rental rates dropping the fastest in the United States in places where gas prices are highest, such as California, Oregon and Washington, according to Zeta Global.
However, “hotels are on fire,” said Bamberger. “Some hotels in Las Vegas are at 95% occupancy rates, and this past Memorial Day was the best ever recorded day — revenue-wise — for many of the top hotel chains in the U.S.”

‘Still going to travel’

Rising costs are affecting travel expenditures this summer, with 74% of American consumers actively searching for ways to save on travel, according to Zeta Global. Nearly one in four say they are seeking out cheaper transportation, hotels or vacation destinations, according to the company.
But Expedia CEO Peter Kern told CNBC that other travelers are ready to spend more to travel.

“We all know there was lots of pent-up savings and underspend during Covid on services and travel,” he said. “So far it seems to be bearing out, that people are interested in spending — and if anything, spending more.”
When asked about reports that people are opting for cheaper vacations, he said: “We haven’t that so far … particularly in the middle and upper end of the market.”
Kern said if inflation starts to affect travelers, he agreed they will likely change, but not eliminate, their plans.
“If anything, perhaps travelers take a little bit off what their ambition is — of where they were going or what they were staying in — but they’re still going to travel,” he said.

‘Gangbusters’ summer

Marriott CEO Anthony Capuano said the company, which operates in nearly 140 countries according to its website, is now seeing strong demand not just from leisure travelers, but also from group and business travelers.
“We think the summer is going to be gangbusters,” he told CNBC’s “Squawk on the Street” in May. “We feel great about this summer.”
After two consecutive months of negative demand, business travel interest in the United States increased by 365% in May, according to Zeta Global, which tracks website usage as well as location and transactional data from credit card and loyalty program purchases.

Business travel is increasing faster among younger travelers than older, senior-level ones, according to Zeta Global.
Goodlifestudio | E+ | Getty Images

International travel interest from Americans also rose in May, it said, with interest in going to Asia, Europe and South America up more than 200% from the month prior, according to the company.   
That was before the Biden Administration dropped pre-departure Covid test requirements to enter the United States, a move which is expected to kickstart travel into and out of the U.S.
“Removing the testing requirement eliminates a source of stress for travelers which may have been holding them back,” said Expedia Group’s Head of Global PR Melanie Fish. “We expect demand will only grow from here.”  More

Netflix is considering pivoting toward how old media does business as it looks to reinvigorate growth.
The company’s shares have fallen about 70% this year.
Netflix has held several core tenets throughout its streaming existence that executives are now rethinking.

Reed Hastings, co-founder and chief executive officer of Netflix Inc., during the Milken Institute Global Conference in Beverly Hills, California, U.S., on Monday, Oct. 18, 2021.
Kyle Grillot | Bloomberg | Getty Images

In the foreword to Hamilton Helmer’s “7 Powers: The Foundations of Business Strategy,” published in 2016, Netflix co-founder and co-CEO Reed Hastings describes what happens when market leaders don’t adjust to new competitive forces.
“Throughout my business career, I have often observed powerful incumbents, once lauded for their business acumen, failing to adjust to a new competitive reality,” Hastings writes. “The result is always a stunning fall from grace.”

Six years later, Hastings finds himself in the role of an incumbent that has, for the moment, experienced a stunning fall from grace. Netflix shares have fallen more than 70% year to date. The company announced in April it expects to lose 2 million subscribers in the second quarter. Investors have sold in droves as they question the size of the total addressable streaming market — a number Netflix has previously said could be as high as 800 million. As of the latest count, Netflix has about 222 million global subscribers.

Netflix executives are now reflecting on how they failed to adjust to a new competitive reality, one which was masked by massive subscriber gains during the Covid pandemic when billions of people around the world were stuck at home. While the company has consistently churned out big hits, such as “Stranger Things” and “Squid Game,” Netflix is rethinking many of the philosophies that disrupted the industry more than a decade ago.
The change in strategy, even on the margins, is a surprising one for a company best known for disrupting two industries — first video rental and then cable TV. Instead of inventing new ways to upend what’s become a crowded streaming video industry, Netflix is reconsidering nearly all of the ways it stood out from legacy media companies in the first place.
In other words, Hastings has decided his best strategy now is to un-disrupt.
“It’s notable that Netflix is seeking growth by rethinking many of its firmly held beliefs,” said Joel Mier, Netflix’s director of marketing from 1999 to 2006 and a lecturer in marketing at the University of Richmond. “These decisions will clearly help revenue and subscriber growth in the short- to mid-term. The larger question is how they will impact the firm’s brand over the long-term.”

Netflix declined to comment.

Embracing advertising

Hastings has long proclaimed Netflix’s aversion to advertising is due to the added complexity of the business.
“Advertising looks easy until you get in it,” Hastings said in 2020. “Then you realize you have to rip that revenue away from other places because the total ad market isn’t growing, and in fact right now it’s shrinking. It’s hand-to-hand combat to get people to spend less on, you know, ABC and to spend more on Netflix. We went public 20 years ago at about a dollar a share, and now we’re [more than] $500. So I would say our subscription-focused strategy’s worked pretty well.”
Netflix is no longer more than $500 a share. It closed at $169.69 on Monday.
Since making that comment in 2020, Hastings has watched other streaming services, including Warner Bros. Discovery’s HBO Max, NBCUniversal’s Peacock and Paramount Global’s Paramount+, launch lower-priced services with ads without a consumer backlash. Disney plans to unveil a cheaper ad-supported Disney+ later this year.

A sign is posted in front of Netflix headquarters on April 20, 2022 in Los Gatos, California.
Justin Sullivan | Getty Images

In April, Hastings announced he’d changed his mind. An ad-supported Netflix “makes a lot of sense” for “consumers who would like to have a lower price and are advertising tolerant,” he said.
Netflix has previously argued it found a gap in the market by not worrying about advertising. Niche shows, which wouldn’t play well with advertisers, who want scale, could be valuable for Netflix if they brought in enough subscribers relative to production budgets.
It remains to be seen whether Netflix will offer its full slate of content on an ad-supported service or if certain shows will be walled off for no-ad subscribers only.

Developing shows

Part of Netflix’s pitch to content creators has been ordering “straight to series,” rather than making traditional pilot episodes of shows and judging them based on a hard product. Other streamers have followed suit after seeing Netflix attract A-list talent by skipping pilots.
“If you’re a typical studio, you raise money for a pilot, and if it tests well, you pick up the show, maybe you make a few more episodes, and you wait for the ratings,” Barry Enderwick, who worked in Netflix’s marketing department from 2001 to 2012 and who was director of global marketing and subscriber acquisition, told CNBC in 2018.
“At Netflix, our data made our decisions for us, so we’d just order two seasons. Show creators would ask us, ‘Do you want to see notes? Don’t you want to see a pilot?’ We’d respond, ‘If you want us to.’ Creators were gobsmacked.”
Ordering projects straight to series gave writers and producers certainty and, frequently, more money. The downside, Netflix has found, is it’s also led to series that didn’t turn out to be very good. Deadline noted 47 different examples of Netflix ordering straight to series in 2020-21 and 20 for 2022. While a few are notable, such as “The Witcher: Blood Origin” and “That ’90s Show,” most have generated little buzz.
Netflix plans to start ordering more pilots and slow down on its straight-to-series development process, according to people familiar with the matter. The hope is the end result will lead to higher-quality programming and less fluff.
Netflix doesn’t plan to lower its overall budget on content. Still, it does intend to reallocate money to focus on quality after years of adding quantity to fill its library, the people said. Executives have added more original programming in recent years to avoid a lasting reliance on licensed content — much of which has been pulled back by the media companies who own it to fill their own streaming services.

Appointment viewing

Another Netflix hallmark has been its long-held decision to release full seasons of series all at once, allowing users to watch episodes at their own pace.
“There’s no reason to release it weekly,” co-CEO Ted Sarandos said in 2016. “The move away from appointment television is enormous. So why are you going to drag people back to something they’re abandoning in huge numbers?”

Netflix co-CEO Ted Sarandos attends the Allen & Company Sun Valley Conference on July 08, 2021 in Sun Valley, Idaho.
Kevin Dietsch | Getty Images

Still, in recent years, Netflix has experimented with weekly releases for some reality shows instead of bulk drops. Thus far, this hasn’t extended to scripted streaming.
“We fundamentally believe that we want to give our members the choice in how they view,” Peter Friedlander, Netflix’s head of scripted series for U.S. and Canada, said earlier this month. “And so giving them that option on these scripted series to watch as much as they want to watch when they watch it, is still fundamental to what we want to provide.”
But people familiar with the matter said Netflix will continue to play around with weekly releases for certain types of series, such as reality TV and other shows based on competition.
Netflix’s resistance to weekly scripted release may be the next thing to go.

Live sports

Netflix has always rejected bidding on live sports, a staple of legacy media companies.
“To follow a competitor, never, never, never,” Hastings said in 2018. “We have so much we want to do in our area, so we’re not trying to copy others, whether that’s linear cable, there’s lots of things we don’t do. We don’t do (live) news, we don’t do (live) sports. But what we do do, we try to do really well.”
Yet, last year, Hastings said Netflix will consider bidding on live Formula One rights to pair with the success of its documentary series “Drive to Survive,” which profiles each racing season.

Max Verstappen of the Netherlands driving the (1) Oracle Red Bull Racing RB18 to the grid before the F1 Grand Prix of Emilia Romagna at Autodromo Enzo e Dino Ferrari on April 24, 2022 in Imola, Italy.
Dan Istitene – Formula 1 | Formula 1 | Getty Images

“A few years ago, the rights to Formula 1 were sold,” Hastings said to German magazine Der Spiegel in September. “At that time we were not among the bidders, today we would think about it.”
This month, Business Insider reported Netflix has been holding talks with Formula One for months for U.S. broadcast rights.
Adding live sports may give Netflix a new audience base, but it flies in the face of Netflix’s recent aversion to spending big money on licensed programming.

Limiting password sharing

For many years, Netflix dismissed password sharing as a quirky side issue that merely demonstrated the popularity of its product. In 2017, Netflix’s corporate account tweeted “Love is sharing a password.”
But as Netflix’s growth has slowed, executives see password-sharing crackdowns as a new engine to reinvigorate revenue growth. “We’re working on how to monetize sharing. We’ve been thinking about that for a couple of years,” Hastings said during the company’s April earnings conference call. “But when we were growing fast, it wasn’t the high priority to work on. And now, we’re working super hard on it.”
Over the next year, Netflix plans to charge accounts that are clearly shared with users outside the home additional fees.
“We’re not trying to shut down that sharing, but we’re going to ask you to pay a bit more to be able to share with her and so that she gets the benefit and the value of the service, but we also get the revenue associated with that viewing,” Chief Operating Officer Greg Peters said during the same call, adding it will “allow us to bring in revenue for everyone who’s viewing and who gets value from the entertainment that we’re offering.”
CNBC reported earlier on how the password-sharing crackdown is likely to work.

No longer pure-play streaming

Netflix has become famous for its 2009 culture presentation, which laid out the company’s values. One of the company’s core tenets speaks to innovation. “You keep us nimble by minimizing complexity and finding time to simplify.”
Netflix has benefited from being a pure-play streaming company for years. While other media companies, such as Disney, have lagged because of a conglomerate discount and slow-growing or declining legacy assets, investors have loved Netflix’s one-trick pony: streaming growth.
But that, too, is slowly changing. Netflix announced last year it’s dabbling in video games. Netflix currently has 22 video games on its platform and aims to have 50 by year end.
Adding a new vertical to streaming video may help Netflix give investors a new reason to bet on the company’s future growth. But it also potentially cuts at a long-held Hastings’ tenet: that focusing on movies and TV shows is what sets Netflix apart.
“What we have to do is be the specialty play,” Hastings told CNBC in 2017. “We focus on how do we be, really, the embodiment of entertainment, and joy, and movies and TV shows.”
WATCH: Netflix is probably best positioned among streamers in recession environment, traders say

— CNBC’s Sarah Whitten contributed to this story.
Disclosure: NBCUniversal is the parent company of NBC and CNBC.

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It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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Bausch Health Companies Inc: “I can not believe that this has worked out as bad as it has. It’s one of the worst picks I’ve had. … [CEO Joe Papa’s] got to come back on the show. That’s the only way to clear the air.”

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Equinix Inc: “I thought that Equinix would be a good stock, but you know what, we’re in a situation now where anything that’s just a building with plumbing in it’s not doing it for people. We’re going to have to stay away for now.”

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Mosaic Co: “I can not recommend buy or sell, because it is at a level that is just right at the precipice of either going back up or going down big.”

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Farmland Partners Inc: “I like Farmland Partners. … It just is very, very expensive, and that’s the problem.”

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Saverone 2014 Ltd: “I find myself loathe to recommend something that is not making money. …. I’ve got to be cut and dry in this bear market. I just have to.”
Disclosure: Cramer’s Charitable Trust owns shares of Bausch Health.

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CNBC’s Jim Cramer on Tuesday offered investors a list of stocks he believes will help investors’ portfolios withstand the geopolitical and economic issues currently roiling the stock market.
“When the market comes down so far, so fast, you can find genuinely good buying opportunities,” the “Mad Money” host said.

CNBC’s Jim Cramer on Tuesday offered investors a list of stocks he believes will help investors’ portfolios withstand the geopolitical and economic issues currently roiling the stock market.
“When the market comes down so far, so fast, you can find genuinely good buying opportunities,” the “Mad Money” host said.

“You’ve got to be selective because the market remains horrific. That means picking at the kind of defensive stocks that can hold up just fine even with inflation and the very real possibility of a Fed-mandated recession,” he said.
The S&P 500 slipped deeper into bear market territory on Tuesday, while the Dow Jones Industrial Average saw a small decline. The Nasdaq Composite saw a slight gain.
Cramer said that investors will want to pick up cheap names with dividend protection and healthy growth, and came up with a list of stocks in the S&P 500 he believes they should be eyeing.
To create the list, he first ran a screen on the index for companies that fit the following three criteria:

Its stock trades at less than 16.5 times earnings (the average stock in the S&P 500 currently trades at 16.5 times earnings, according to Cramer)
It is expected to grow earnings both this year and next year
Its stock yields more than 3.5%, in order to stay above the benchmark 10-year Treasury yield

Left with 23 names that fit the above requirements, Cramer picked out his 10 favorites.

Here is the list:

Devon Energy
ONEOK
Verizon
Huntington Bancshares
VICI Properties
Newell Brands
IBM
Cisco
Advance Auto Parts
NRG Energy

Disclosure: Cramer’s Charitable Trust owns shares of Cisco and Devon Energy.
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Disclaimer

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CNBC’s Jim Cramer on Tuesday said that there could be a “key moment” for investors to do some buying in the S&P 500 this week, leaning on analysis from DeCarley Trading market strategist Carley Garner.
“Eventually the bears will run out of firepower and some of the money sitting on the sidelines will come back into the market,” the “Mad Money” host said. “This is a bullish scenario, people.”

CNBC’s Jim Cramer on Tuesday said that there could be a “key moment” for investors to do some buying in the S&P 500 this week, leaning on analysis from DeCarley Trading market strategist Carley Garner.
Garner believes there’s a “moderate chance” of a rebound later this week, but the more likely scenario is either seeing some stability around where the S&P 500 is currently trading or a breakdown to the 3,500s, the “Mad Money” host said.

“At that point, though, she would want you to be a buyer, not a seller, because eventually the bears will run out of firepower and some of the money sitting on the sidelines will come back into the market,” he added. “This is a bullish scenario, people.”
The S&P 500 slid deeper into bear market territory on Tuesday as it fell for the fifth day. The Dow Jones Industrial Average saw a small decline, while the Nasdaq Composite inched up slightly.
“Even if the present is awful, stocks tend to bottom when the fundamentals are at their worst because the averages don’t reflect the present, they reflect what we’re expecting in the future, say six to twelve months out,” Cramer said.
To start his explanation of Garner’s analysis, Cramer took a look at the daily chart of the S&P 500 June futures contract:

Arrows pointing outwards

Garner believes the S&P 500 might be oversold and could be ready for a bounce, according to Cramer. 

The relative strength indicator at the bottom of the chart, an important momentum indicator, is near 30. That shows that prices are getting oversold. Coupled with the fact that the RSI and S&P 500 are diverging, the sellers are starting to get tired, said Cramer.
Garner also believes that the recent dismal consumer sentiment index number from the University of Michigan suggests that the S&P 500 is close to bottoming, according to Cramer.
If the S&P 500 makes a “miraculous” recovery above 4,030 — a key floor of support roughly 300 points above where it currently is – the current decline could be chalked up to a “bear trap” that will send the S&P soaring higher around 4,400. But without the recovery, the index could plunge to its next floor of support around 3,550, said Cramer.
“But, and this is a very big but, if we do get a decline to the 3,500s, she thinks that would be a buying opportunity. Of course, she could be wrong,” Cramer said.
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Disclaimer

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CNBC’s Jim Cramer on Tuesday called for Federal Reserve Chair Jerome Powell to implement aggressive interest rate hikes to tamp down inflation.
“He has to hit us with some monster rate hikes to cool things down … just to fix a problem not of his own making,” the “Mad Money” host said.

CNBC’s Jim Cramer on Tuesday called for Federal Reserve Chair Jerome Powell to implement aggressive interest rate hikes to tamp down inflation.
“Jay Powell can’t solve the war in Ukraine. He can’t get more oil out of the ground. … The same goes for the other big source of inflation, food,” the “Mad Money” host said.

“He has to hit us with some monster rate hikes to cool things down while selling, I hope, at least $200 billion in bonds a month — twice the current schedule — just to fix a problem not of his own making,” he added.
His comments come as the Fed began its June meeting to decide the size of the next interest rate hike, which will be announced on Wednesday. 
The Fed, which raised interest rates by 25 basis points in March and 50 basis points in May, will also start offloading some of its balance sheet on Wednesday in an effort to drain trillions of dollars of liquidity from the financial system.
Investors and central bank policymakers alike are bracing for a 75-basis-point rate hike on Wednesday. The market reacted accordingly as the S&P 500 slipped further into bear territory on Tuesday while the Nasdaq Composite and Dow Jones Industrial Average also remained volatile.
Inflation hit new highs in May as prices rose 8.6% from last year in the fastest increase in over four decades, also driving the market’s recent declines.

Cramer has advocated for 100-basis-point rate hikes in recent weeks, urging Powell to take stronger action even as he argued that the Fed chief is not to blame for the current state of inflation.
“In retrospect, the Fed provided way more liquidity than it needed to. It should’ve stopped buying bonds more than a year ago. …  But beyond selling trillions in bonds to rein in the economy and raising rates to cool down what can be cooled — which isn’t much — we’ve got to stop blaming Powell for all things inflation,” Cramer said.

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The average rate on the popular 30-year fixed mortgage rose 10 basis points to 6.28% Tuesday, according to Mortgage News Daily.
The rate was 5.55% one week ago.
Rising rates have caused a sharp turnaround in the housing market. Home sales have fallen for six straight months, according to the National Association of Realtors.

Mortgage rates jumped sharply this week, as fears of a potentially more aggressive rate hike from the Federal Reserve upset financial markets.
The average rate on the popular 30-year fixed mortgage rose 10 basis points to 6.28% Tuesday, according to Mortgage News Daily. That followed a 33 basis point jump Monday. The rate was 5.55% one week ago.

Jb Reed | Bloomberg | Getty Images

Rising rates have caused a sharp turnaround in the housing market. Mortgage demand has plummeted. Home sales have fallen for six straight months, according to the National Association of Realtors. Rising rates have so far done little to chill the red-hot home prices fueled by historically strong, pandemic-driven demand and record low supply.
Read more: Compass and Redfin announce layoffs as housing market slows
The drastic rate jump this week is the worst since the so-called taper tantrum in July 2013, when investors sent Treasury yields soaring after the Fed said it would slow down its purchases of the bonds.
“The difference back then was that the Fed had simply decided it was time to finally begin unwinding some of the easy policies put into place after the financial crisis,” wrote Matthew Graham, chief operating officer of MND. “This time around, the Fed is in panic mode about runaway inflation.”
Mortgage rates had set more than a dozen record lows in the first year of the pandemic, as the Federal Reserve poured money into mortgage-backed bonds. It recently ended that support and is expected to start offloading its holdings soon.

That caused the rise in rates that began in January, with the average rate starting the year at around 3.25% and pushing higher each month. There was a brief reprieve in May, but it was short-lived.
Higher home prices and rates have crushed home affordability.
For instance, on a $400,000 home, with a 20% down payment, the monthly mortgage payment went from $1,399 at the start of January to $1,976 today, a difference of $577. That does not include homeowners insurance nor property taxes.
It also does not include the fact that the home is about 20% more expensive than it was a year ago.

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