Australians overstating assets and income on mortgage applications

Peter Terlato 7 October 2016

loan application online

More Aussies are claiming brokers encouraged information misrepresentation on loan applications.

More than a quarter of Australian home buyers admit to falsifying or misstating some information when submitting a home loan application, according to new survey results.

A UBS survey of 1,228 Australians who recently purchased a home revealed 28% of buyers weren't completely factually accurate when filling out their mortgage application.

While the majority of respondents who admitted to distorting their information said their application was "mostly factual and accurate", a small number (5%) said what they submitted was only "partially factual and accurate", while a few (2%) "would rather not say" how much of their information was genuine.

These misrepresentations related to a range of different areas.

While almost one third (31%) of respondents who falsified parts of their applications "would rather not say" what they lied about, 26% said they under-represented living costs, 17% under-represented other financial liabilities, 14% over-represented household income and 13% overstated other assets.

11% claimed they distorted "other" information, while 12% stated they misrepresented multiple factors.

Looking at the data more closely, there are links between borrowers who doctored some of their application and those whose expenditure was generally equal to their income; those suffering financial stress; and those who have missed a debt payment.

Almost a third (32%) of Aussies who took out a mortgage through a broker admitted to misrepresenting some part of their application, compared with just 22% of those who secured a loan through a bank.

What's more worrying is 41% of respondents who falsified elements of their application did so on the advice of their broker. Proportionately this practice was significantly lower (13%) among bank applicants.

The infographic above shows the different areas of applicant misrepresentations among mortgage broker loans and bank loans.

Are you buying a home or investment property, or refinancing your existing loan? Compare brokers and banks using our free home loan finder service and check out our ultimate Australian home buying guide.

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Picture: Shutterstock

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