The adverts, which were streamed and on TV in April this year, showed a cartoon woman being shown a newspaper with a headline reading: “%INTEREST RATES RISE! Homeowners 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 life of your mortgage to give you ultimate peace of mind”.
The woman then uses her phone to access the Habito One product, which creates forcefield around the woman and her house, preventing the wasps from stinging her.
The advert received ten complaints, some of which said that interest rates were low at the time whilst Habito’s were high.
The complaints also also targeted the fact the advert exaggerated the likelihood of mortgage rates rising and the risk this posed to customers, especially if they did not opt for a long-term fixed rate mortgage.
Complaints also said Habito’s tag line that the mortgage process was either hell or Habito contributed to a negative perception of the wider market.
ASA said that whilst there was uncertainty around future changes in interest rates, and it was a concern for some consumers, the advert was misleading.
It said: “While interest rates might well rise, future trends could not be predicted with any certainty. Taking into account the imagery in the ad illustrating potential consequences in extreme terms and the sense of certainty with which they were presented, we considered that the impression created by the ad misleadingly exaggerated the likelihood that future rate rises would be significant compared to current rates and the risks of the rest of the mortgage market compared to the Habito One product.”
It pointed to research which showed that interest rates for a £200,000 loan for a £250,000 house at 80 per cent loan to value (LTV) started at 1.64 per cent for a five-year fixed rate.
In 2019 this varied between 2.51 and 2.92 per cent, and in 2018 this varied between 2.87 per cent and 2.93 per cent, which ASA said showed interest rates currently were low compared to recent years.
As part of the ruling ASA said that the adverts must not appear again and Habito should ensure future adverts “did not exaggerate the likelihood of future significant interest rates” or the “risks of the rest of the mortgage market” compared to its Habito One product.
Habito’s chief marketing officer Abba Newbery said that it was “disappointed” about the decision to the ban the advert.
She said: “While we of course respect and accept the ASA’s ruling, we refute the claim that our ad was misleading. Since it first aired, there have been numerous news reports from economists warning of interest rate rises in line with rising inflation. Senior policy-makers at the Bank of England have signalled at least two rate rises for 2022 with latest reports suggesting a rate rise 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, vagueness and potential risk – such as potential future interest rate rises – from homeowners’ home-financing decisions.
“We stand by our product and our claims and are unapologetic about our mission to save people from the uncertainty of home financing hell.”
Habito launched the 40-year fixed rate product in March this year, which is available between 60 and 90 cent LTV. Rates for the products start from 2.99 per cent for a 10 to 15-year mortgage term and increase with term length.
The firm has previously received complaints for its advertising, none of which have been upheld, including a “mortgage kama sutra” advert with suggestive sexual positions and a werewolf advert which received over 100 complaints.