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Hitwise Intelligence - Robin Goad - UK

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Interest rates: the relationship between online and offline behaviour

April 15, 2009

The Internet is now a key source of info for the majority of people in the UK. Consequently, search engines are one of the first places people turn to for information on everything from celebrity culture to the global financial crisis. Therefore it can be informative to use Hitwise search data as a way of monitoring not only online behaviour, but also the reaction to events in the ‘real’ world.

We often see these correlations between online and offline data in the financial services world. For example, searches for ‘house prices’ broadly follow real house prices: increasing in the boom times, but falling as the credit crunch began to bite. But what about interest rates: how have people responded the massive drops that have taken place over the last six months? The chart below illustrates two data sets: the pink line represents the Bank of England interest rate over the last 3 years; the blue line is the weekly UK search volume for the term ‘interest rates’.

UK_Internet_searches_for_interest_rates_2009_2008_2007_2006_chart.png

Up until Autumn 2008 - broadly speaking - searches for term ‘interest rates’ increased in line with actual interest rates. There were obviously weekly fluctuations and noticeable peaks during the weeks when interest rates actually changed, but the correlation is there to see.

However, searches for interest rates increased dramatically last Autumn, as the Bank of England’s monthly decreases became more significant. Searches for ‘interest rates’ reached their highest ever level following the 1.5% drop at the start of November 2008 and since then they have peaked each time that the rates have changed. But the height of those peaks has decreased in line with falling interest rates, re-instating the correlation between searches and actual rates.

It is also interesting to see where people go after searching for interest rates - and how this has changed over time. Looking back to the boom times and picking week when the Bank of England increased interest rates (w/e 11/11/06), 40.7% of people searching for ‘interest rates’ went to a website in our Banks and Financial Institutions category, while 29.6% went to a News and Media site. Fast forward to the last downward adjustment – w/e 07/03/09 – and more people (50.9%) went to a News and Media site than visited the Banks and Financial Institutions category (29.6%).

So, the general increase in ‘interest rate’ searches is as much down to curiosity as people making financial decisions. Presumable this is because interest rate changes are now perceived to have a wider economic significance than simply feeding into mortgage rates. Then again, it may be that news websites have realized that the economic crisis is a good story, and have therefore become more effective at picking up traffic from economic search terms. The truth, I suspect, lies somewhere in between these two explanations.

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