“Disturbing” study finds home loan fraud rampant
Almost one in every three home loan borrowers lie to potential lenders about their finances in order to secure a loan according to a new study of 1228 Australian home loan borrowers by banking analysts UBS. 28 per cent of borrowers admit that their loan applications are “not completely factual and accurate.” UBS bank analyst Jonathon Mott said the survey findings are “disturbing.”
“These figures may understate the level of misrepresentation in mortgage applications,” said Mr Mott.
What do borrowers lie about in loan applications?
26 per cent of survey respondents who lie in loan applications understate the cost of food, bills and necessities. 17 per cent understate the value of their existing debts, especially their credit card balance. 14 per cent inflate their annual income while 13 per cent overstate the value of their assets. 11 per cent have applied for an owner-occupier loan when they were actually buying an investment property. 30 per cent of the borrowers refused to reveal how they had misled their lender.
Big surge in mortgage broker frauds
41 per cent of borrowers who used a mortgage broker said the broker had advised them to lie about their financial position. That number is up from 24 per cent in 2015. Just 13 per cent said a bank employee had helped them to fabricate financial details. Mortgage brokers are not as heavily regulated as bank and credit union employees.
Banks and other lenders pay brokers up-front commissions averaging about 0.63 per cent of the value of the home loans they sell, plus trailing (ongoing) commissions of about 0.2 per cent of the loan per year, according to a report this week in The New Daily. On a $400,000 mortgage, that equals about $2100 upfront and $800 per year.
Take control and apply directly – with InfoChoice
About half of all borrowers use a mortgage broker to find and apply for a home loan. Many mortgage brokers claim to have a wide range of lenders and loans on offer. However no mortgage broker can give you access to home loans from all of Australia’s significant banks, credit unions and building societies.
InfoChoice currently lists more than 160 variable rate home loans for owner-occupiers. You can compare products directly by ticking the check boxes on the left hand side of the comparison tables.
InfoChoice currently lists more than 160 fixed rate home loans for owner-occupiers and investors.The features and fees of each loan are explained fully under their respective tabs at the top of the InfoChoice comparison tables.
Each lender’s full range of products and offers is analysed for your convenience at InfoChoice. For example, here is the InfoChoice page on CUA.
With InfoChoice, you can do it yourself, save thousands of dollars and remain in control of your financial information.