While it is you guys and girls out there who take part in the nitty gritty that is doing business in the mortgage world, we in the media like to think we too play an important role.
As well as being a voice for our readership, we aim to keep everyone up-to-date with all the latest news and information and occasionally challenge the industry to improve itself.
However, the recent turmoil that has gripped the credit market has forced everyone to reassess their positions, including the media. In a switch from its usual stance of simply having a fleeting acquaintance with the mortgage market, the national press has dived in head-first. Meanwhile, the trade press has had to work to ensure it doesn’t get swept up with the apocalyptic premonitions and remember that the market is still functioning.
Dealing with different agendas
Anthony Frost, head of media relations at Abbey, admits the landscape has changed. He says: “It is interesting as the credit crunch has moved the agenda away from the specialist press to the front pages. The trades understand the market but we are now dealing with the different agendas of the nationals. They just want a story – Northern Rock, for example – and there are different editors applying different pressures.”
The Northern Rock crisis was symptomatic of this different news agenda driving the media. While the trades had been monitoring the credit crunch for a number of weeks, its appearance on the BBC’s 10 O’Clock News transformed the story from a specialist finance issue to something which was set to impact on every family in Britain.
The queues which formed outside Northern Rock branches over the following days highlighted the panic which had been installed, and as Frost admits: “The messages of reassurance were there, but the visuals of people queuing changed everything.”
However, to simply draw a line between the trade and national press doesn’t paint the full picture as there were wide differences in how the written and broadcast media reported the story.
The 24-hour news channels have changed the face of journalism in recent years and the images of people queuing outside Northern Rock branches were being broadcast over and over again, helping perpetuate the fear in the general public. This was highlighted even further by broadcasters, with reporters being told by those queuing that they were there because they’d seen the lines on national television and had followed suit.
Shouldering the responsibility
But how much responsibility should the media shoulder for the run on the Northern Rock? Speaking to the Treasury Select Committee, Adam Applegarth, chief executive of Northern Rock, insisted the fact the story broke on the BBC caused panic among its members, which caused the bank ‘immense difficulties’.
Anna McKane, director of undergraduate studies at City University’s journalism school, believes that, as in all areas of the property market, the press has a fine line to tread.
“The press plays a massive role in dictating confidence in the housing and mortgage market and I think it very much has a duty not to make things worse. But, of course, it has to report what is happening.”
But for Linda Will, managing director of Accord Mortgages, the whole episode has highlighted the importance of knowledge. She explains:
“The big problem with the nationals, and the broadcasters in particular, is that they don’t often report financial matters. When you hear people on Sky calling Northern Rock a building society, it’s really unhelpful.
"Personal finance journalists know their jobs, but the public need to understand where the issues are coming from and that they will be resolved. The market survives on confidence, but if the press is getting the fundamentals wrong, confidence is shot. The run on Northern Rock was a product of that sensationalism.”
This is a view that Simon Chalk, mortgage planner at Mortgage Portfolio Services, echoes. He says: “The trade press could have berated lenders like Northern Rock and kicked them while they were down, but they have not expected lenders to have the foresight on this unprecedented event, which is commendable. However, for those outside the industry, the same cannot be said, as there has been a lot of ignorant comment in the national press.”
Grasping the true nature of the story
So if the journalists weren’t grasping the true nature of the story, how could the public at large? What didn’t help, according to Frost, was the way in which it was broadcast.
“It wasn’t about bad mortgages but funding issues – the sort of thing which the specialist journalist understands but the ones trying to explain the situation to the public don’t. But you also have to remember you just cannot explain the ins and outs of the wholesale markets in a two-minute segment on the nightly news.”
Therefore, the media should probably hold its hands up for playing some role in the credit crisis, but as McKane points out, the press can only report what is happening. However, the way it was reported was more indicative of a wider issue prevalent in the press, in that there’s no news like bad news.
As Frost comments: “The media is always looking at the glass half-empty and I don’t think there is any surprise at how the media works. The story could have been reported in a different way as after a couple of days the reassurances started to come through, but you could have said ‘Northern Rock safe’ at the beginning, instead of ‘Northern Rock in crisis’. The battle was lost early on with the consumers as the debate about the problems was secondary to the queues.”
