When President Donald Trump lashed out at Google, calling it “rigged” to show negative stories about him when users searched on the term “Trump news,” it was a reminder of the power of the technology that shapes our lives.
Google /zigman2/quotes/205453964/composite GOOG -0.37% had managed to avoid the kind of scrutiny that’s swamped Facebook /zigman2/quotes/205064656/composite FB +1.19% and Twitter /zigman2/quotes/203180645/composite TWTR -1.46% over the content that’s posted to their sites – even though its own model conveys a double dose of power. Anyone trying to reach lots of eyeballs – politicians, businesses, journalists – is concerned, like the president, about what web sites Google will suggest when certain terms are searched.
But another reason Google is dominant is that it knows what we are all looking for on the internet. It’s like our communal therapist: a mass repository for questions about medical fears, our best-laid plans for working out, dieting and being organized, and our naughtiest fantasies.
Google searches are often a bit more benign – but still reveal a lot. MarketWatch took a look at the history of Americans’ searches for the term “mortgage rates” over the past 14 years, which was the longest back in time we could take that search. The pattern that emerges, plotted on the chart above, reads like a consumer history of the American economy and financial markets in a particularly edgy moment in time.
Google – more precisely, its “Trends” tool – tells you the frequency of searches for any term over the period being queried. It identifies the point at which that phrase received the most searches (noted as “100” here), and then plots the frequency of that search throughout the rest of the time period, compared to the high point.
What are people searching for when they’re searching on “mortgage rates”? Perhaps a new job has suddenly brought homeownership – or a bigger home – closer to reality.
There’s a definite pattern to when Americans search on the term– usually it spikes on Mondays. Are chance conversations with a neighbor over the fence on the weekend reminding people that now might be a good time to refinance?
Over a long period of time, though, it’s clear that people are searching “mortgage rates” because of what’s going on in the news.
The high point in the 14 years charted above is December 2008. That’s a little after what we think of as the “financial crisis” of 2008. After the spasms through the credit markets and financial institutions in September, the Federal Reserve reacted by slashing interest rates from 2% down to 1%.
But then the central bank pulled out an even bigger bazooka. In late November, the Fed and Treasury announced plans to purchase hundreds of billions of dollars of mortgage bonds, a step that became known as quantitative easing, or QE. “This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” the press release noted .
In the week before that announcement, the 30-year fixed-rate mortgage averaged 6.04%, according to Freddie Mac. In the following week, it averaged 5.53%. And it just kept falling, ending December at 5.10%.
Another high point: August 2011, when Standard & Poor’s downgraded the credit rating of the United States. The market response was counter-intuitive: investors rushed to the safety of traditional haven assets, including U.S. bonds – the ones the credit-rating agency had just pronounced riskier than previously thought. The benchmark 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y 0.00% saw its steepest one-day decline in nearly two years. Mortgage rates, meanwhile, declined about 33 basis points throughout the month of August.
(The high point in between those two peaks, August 2010, is a little harder to divine. The 10-year fell about 50 basis points over the course of that month, but it’s unclear exactly what prompted investors to flock to bonds. It’s possible that had to do with a Fed move to reinvest the proceeds of maturing mortgage-backed securities so that its balance sheet did not shrink. Financial markets were also generally jittery about the eurozone debt crisis, and starting to become worried that the Fed’s actions up to that point hadn’t done much to stimulate the economy.)
The third big peak, July 2013, is also an oldie-but-goodie for economy-watchers. Late that May, then-Fed Chairman Ben Bernanke told Congress that if the central bank saw “continued improvement and we have confidence that that is going to be sustained, then in the next few meetings, we could take a step down in our pace of purchases.” The response to that idea, that the Fed could taper its bond purchases, became known as the “taper tantrum.”
Usually, mortgage rates follow the path of the 10-year, but don’t move as fast or as dramatically. In 2013, that pattern was reversed. Over the coming months, the benchmark bond rose about 50 basis points, but the 30-year-fixed surged nearly a full percentage point. That jump in rates, coming so early in a shaky recovery, was widely considered to have set back progress in the housing market for some time.
It’s likely that searches for “mortgage rates” will taper off, pardon the pun, over the coming months and years. Without enough supply of homes, the housing market has become a lot more stagnant than it could be. And after years of rock-bottom interest rates, there are few people left who could benefit from a refinance. With home equity swelling, Americans may start to be more curious about web sites about “cash-out refis” and “home equity loans.”
Max Deirmenjian contributed to this article