Bait and Switch Mortgage Rate Advertisements

EDITORS NOTE: Please notice this post is from February 2008! Wachovia is gone, 5.5% isn’t a great rate “right now” and I no longer publish rates at Rain City Guide or weekly here at Mortgage Porter. It simply takes too much time. I’m happy to provide your personal rate quote for your home located in Washington.  10/16/11.


Bait and switch is when a consumer is offered something tempting (bait) that is no longer available and then they are offered something else (switch).   I see this over and over again when lenders of all types promote rates in main steam media such as the radio, print ads, bill boards, television…you get the picture.

Today I noticed a Wachovia ad on the TV promoting a low rate of 5.50%…home owners are dancing for joy.  If you watch real closely to the fast moving small print, it discloses that the rate is from January…um folks, February is almost gone and so is the rate that Wachovia is currently running on CNBC.   If you call them for 5.50% (bait) they’re going to offer you something in the low to mid-6’s (switch) per their website tonight.

Advertisements on the radio promoting rate are wrong too.  Even if the rate being broadcast is a live interview, the rate can change at any moment.  I have less issue with a live interview–advertisements are planned well in advance.  The rates you’re hearing now are from a month ago.   Even if they’re from yesterday, they are no longer valid unless the rates are unchanged.    If you call them for the rate (bait) they’ll tell you they don’t have it anymore but (here comes the switch)….

Print ads take at least a couple days to produce and when rates are published in a newspaper or magazine, odds are that rate is long gone as well (if it was ever available to begin with).

I publish rates too.  This started at the request of ARDELL to help show a trend with direction mortgage rates are going based on a specific scenario and it’s also based on a set time.  She also uses it to make sure her buyers are getting a fair shake from their lender.  You’ll notice my disclosures in easy to read print on what it takes to qualify for the rate and the date and time the rate was published.   Rates change so constantly, that often times the rate I publish in the morning is no longer valid by the time I hit “publish”.  This is why I will stagger posting rates on Friday here and at RCG.  If rates change this often, how can anything in print, radio, television or bill board be good for anyone to rely on?

It’s my opinion that a rate should not be published unless it’s available.  Promoting a rate that once was (a month ago) is nothing less than bait and switch.


  1. This is the problem with rate shopping and publishing rates. It is impossible, as you so aptly pointed out, to publish a rate that you can guarantee. So why do it? Why not explain how rates work and tell people how you price a loan?
    I have been doing this for a few months now. Probably have lost some business, but I am very happy with the honesty it engenders!

  2. Dave, if I had a dollar for every honest GFE I issued when I know the other lender was “baiting” or gambling the market would go in their favor. Honesty has a cost–however, like you, it’s a price I’m willing to pay.

  3. Well done, Rhonda. The problem of bait and switch has infected so much advertising it’s ridiculous. In my experience, the best way to handle it is to make sure clients are working with reputable, LOCAL lenders who are constantly providing buyer clients with regular rate updates. This assures them to have the most accurate information possible, and allows them to lock or float a rate immediately instead teaser ads piquing their interest. I agree with Dave’s comment, although I don’t see anything wrong with regular updates – ultimately, it’s the clients’ responsibility to move on a particular rate, and if we show them the benefits – and dollars and cents of a particular program – they’ll be ready to move when the time is right.

    Nice job. And congratulations on the Magnificent 7 Consumer Article nomination by Larry Cragun!

  4. Thanks, Jeremy. Congrats to you, too!

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