ASA bans Habit One advertising for ‘deceptively exaggerated’ interest rate hike allegations in April

The Advertising Standards Authority (ASA) has upheld complaints against Habito over advertisements for its long-term fixed-rate mortgage, Habito One, which was misleading about rising interest rates.

The ads, which aired continuously and on television in April this year, showed a cartoon woman showing off a newspaper with the headline: “% INTEREST RATE INCREASE!” The owners could get stung ”.

She is then attacked by wasps, which have percentage signs on them, with a voiceover then saying, “Don’t get stung by rising interest rates.” With Habito One, repayments are fixed for the duration of your mortgage to give you ultimate peace of mind ”.

The woman then uses her phone to access the Habito One product, which creates a force field around the woman and her house, preventing wasps from stinging her.

The ad received ten complaints, some of which claimed interest rates were low at the time while Habito’s were high.

The complaints were also that the ad exaggerated the likelihood of a rise in mortgage rates and the risk that this posed to customers, especially if they did not opt ​​for a long-term fixed-rate mortgage.

The complaints also indicated that Habito’s slogan that the mortgage process was either hell or Habito contributed to a negative perception of the wider market.

The answer

The ASA said that while there was uncertainty about future changes in interest rates and this concerned some consumers, the announcement was misleading.

He said: “While interest rates may well rise, future trends cannot be predicted with certainty. Considering the images from the ad illustrating the potential consequences in extreme terms and the sense of certainty with which they were presented, we considered that the impression created by the ad deceptively exaggerated the likelihood that future increases in rates are significant compared to current rates and the risks of the rest of the mortgage market compared to the Habito One product.

He pointed to research which showed that interest rates for a £ 200,000 loan for a £ 250,000 home at 80 percent of the value (LTV) started at 1.64 percent for a fixed rate of five years.

In 2019, this ranged between 2.51 and 2.92 percent, and in 2018, it ranged between 2.87 percent and 2.93 percent, which the ASA said showed that interest rates were currently low compared to previous years.

As part of the decision, the ASA said the announcements should no longer appear and Habito should ensure that future announcements “do not exaggerate the likelihood of significant future interest rates” or the “risks for the rest. of the mortgage market “in relation to its Habito One product. .

Habito’s chief marketing officer, Abba Newbery, said he was “disappointed” with the decision to ban the ad.

She said: “While we of course respect and accept the ASA’s decision, we refute the claim that our announcement was misleading. Since it was first broadcast, numerous reports by economists have warned of rising interest rates alongside rising inflation. Senior Bank of England politicians have signaled at least two rate hikes for 2022, with the latest reports suggesting a rate hike as early as November this year. “

She added: “Habito One is the first mortgage of its kind: a long-term fixed rate mortgage designed to remove uncertainty, imprecision and potential risks – such as potential future interest rate hikes – from homeowner financing decisions.

“We stand behind our product and our claims and make no apologies for our mission to save people from the uncertainty of real estate finance hell.”

Habito launched the 40-year fixed rate product in March of this year, which is available between 60 and 90 cents LTV. Product rates start at 2.99% for a 10-15 year mortgage and increase with the length of the term.

The company has already received complaints for its ad, none of which have been confirmed, including a “mortgage kama sutra” ad with suggestive sex positions and a werewolf ad that received more than 100 complaints.

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