1 in 3 Aussies lies to get a mortgage

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October 01 2019
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Australian home buyers are allegedly inflating income and deflating expenses despite banks promising tougher lending standards following the royal commission.

According to research from UBS, 37 per cent of mortgagors were not “completely factual and accurate” when reporting their statements to banks.

It is a significant jump in inaccurate numbers, with 32 per cent of applicants lying when the royal commission was in full swing last during 2018.

Bank analyst at UBS Jonathan Mott stipulated that “since the royal commission was announced, the banks have significantly increased their level of verification, more questions are asked and more documentation is being requested”.

Despite this “tougher lending standard”, he has questioned the legitimacy of the stance, having commented that “while asking increasingly detailed questions appears prudent, it does not appear to be effective as many factually inaccurate mortgages are still working their way through the process”.

The increase in inaccurate mortgage applications was heavily concentrated across certain cohorts, the research has alleged.

Of mortgagors who bought more than one property over the last year, 63 per cent used inaccurate information, while half of mortgagors who own two or more investment properties had also lied (49 per cent).

Inaccurate mortgages were entered into by investors with interest-only mortgages 56 per cent of the time, while a similar number required the use of a guarantor to access lending (53 per cent).

Just over half of would-be borrowers who had their mortgage rejected (53 per cent) admitted having stretched the truth, while three-quarters of hopeful borrowers who had fabricated their circumstances were rejected twice or more (76 per cent).

Worryingly, the research highlighted that 22 per cent of respondents who were factually inaccurate in their application missed a mortgage payment over the last 12 months, versus 6 per cent who were factual, making a case for the need for more stringent testing of information given in loan applications.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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