Despite the rash of foreclosures spreading through many states and a national awareness of the dangers of loans that sound too good to be true (because they increasingly are), pop-up ads promising incredibly low payments remain one of the most recognizable subsets of online advertising.
Reuters ran this feature on the phenomenon this weekend.
The story includes a telling quote referring to the way the mortgage-qualifying landscape changed with the loosened standards lenders adopted:
“Consumers have long felt that if someone is willing to lend, they made a determination that they could afford to borrow, and that clearly is not the way consumers should be viewing it,” said Gary Schatsky, a fee-only financial adviser and attorney based in New York.
And the online ads are confusing. One identified in the story proclaims $667 monthly payments on a $200,000 mortgage:
To figure out the terms for that $200,000 mortgage advertised on LendingTree.com, you have to click on a link and scroll through the details for dozens of other loans until you get to section 34. There, you learn that this particular loan carries a very low 1.25 percent interest rate — but it is fixed for only 30 days.
After that, the payments would likely soar past the promised $667.
LendingTree.com and LowerMyBills.com were the two largest purchasers of online advertising in February, according to data included in the story from TNS Media Intelligence. The two companies spent more than $30 million on the advertising that month.
Now, if you’re looking for a diversion: LowerMyBills.com is the company you might recognize from its interactive web ads that often feature people dancing or getting tattoos because they’re so thrilled with their incredible mortgage rate. This blog takes some of those ads and writes satirical analyses of them.