Feeding [off] the frenzy: when the media enter the mortgage market

Over the past 30 years, Australian housing price and household debt to income ratios have risen to be amongst the highest in the world, and housing affordability has sharply decreased, a situation contributing to growing levels of social inequality and disadvantage, as well as systemic debt exposure risks reminiscent of the Global Financial Crisis. Faced with job precarity and wage stagnation, newly self-responsibilised Australian households have embraced the prevailing neoliberal discourse promoting housing investment as the path to wealth. Using increasingly substantial and longer-term mortgage debt to 'manage' the growing price/wage gap, they have generated a property 'frenzy'. The literature argues that their mortgage decision-making is increasingly susceptible to the influence of the predatory market actors and persuasive designs of the de-personalised and weakly-regulated digital lending environment in which mortgages are now transacted. It further suggests that 21st century lifestyle factors, such as busyness and stress, amplify that vulnerability. The launch of a novel Australian digital lending initiative in September 2017 by a powerful, well-resourced consortium with unprecedented market reach was seen as a potentially disruptive 'game changer', likely to feed the frenzy and exacerbate the situation by encouraging mortgage uptake. Digital media company REA Group, owner of Australia's predominant digital property platform realestate.com.au, entered the Australian housing finance market, acquiring mortgage brokerages and partnering with a major bank. Cross-promoted by their owner, Rupert Murdoch's News Corporation, REA Group offers millions of homeseekers direct 24/7 access to their mortgage lending through the website. This thesis evaluates the effectiveness of that 'REA Initiative' and its impact on household propensity for mortgage uptake, and consequently on Australian housing and mortgage markets. Using a mixed-method case study approach, it combines qualitative, semi-structured interviews of Melbourne-based homebuyer/borrowers, business executives, brokers and regulatory/advocacy representatives, with documentary analysis of secondary sources, triangulated by quantitative analysis of data. The research presents an in-depth descriptive assessment of the Initiative's development and performance, gauging consumer vulnerability, consortium intent and regulatory oversight. Whilst confirming and detailing the very real influences of lifestyle, market actors, platform design and discourse, the research reveals the homebuyer-participants to be 'judicious borrowers', more self-protective in their financial decision-making than the literature would suggest. Despite intensive use of the platform and its tools for property search, few homebuyers interviewed used it as their path to home financing. Instead, in direct contrast to their quotidian banking practices, they deliberately took their mortgage selection offline and limited their mortgage size, acknowledging its significance with regard to their ongoing economic and psychological well-being. Their lack of online engagement in the REA Initiative is substantiated by both qualitative and quantitative findings which detail its modest lending performance to date, an acknowledged disappointment to its stakeholders. This thesis argues, however, that the combined resources and motivation of the consortium, together with the continued evolution of the digital and lending environments operating under a fragmented regulatory system, should preclude complacency. Most notably, this research goes beyond that determination of poor initial lending performance to reveal the Initiative's more compelling opportunities for the consortium, as financialising agents, for both feeding, and feeding off, the frenzy. The first is their well-documented collection, use and sharing with their data partners of the exponentially increasing property, financial, commercial and social consumer data, raising a concern for consumer protection. The second involves the possible expansion of their finance venture into mortgage origination and securitisation in their own right, offering them greater profitability through increased financialisation of platform users, while shifting the risk. With its serious socio-economic implications, that could effectively be the 'game changer' the Initiative was predicted to be. This pioneering integrative analysis of a nexus of housing, finance, technology, consumer behaviour, and the media is positioned at the forefront of current research in all these fields. It reveals that, with regard to both academic analysis and regulatory oversight, it is the gaps between the disciplines, rather than within each of them, that obscures phenomena like the Initiative from consideration, highlighting the need to apply a more comprehensive synthesis of knowledge. Designed within the action-oriented framework of Pragmatism, these findings are intended to form the basis for a Pragmatic community of inquiry, stimulating further research and provoking inclusive, collaborative debate across the widest range of disciplines and theoretical and practical perspectives. It aims at informing effective policy development to protect consumers, society and the economy, while permitting legitimate market operation and innovation.