Fraudulent mortgage applications increased by 8% year on year in 2011, as “financially stressed” consumers tried to hide their bad credit ratings and lied about their jobs, a study has suggested.
A record 34 in every 10,000 applications for mortgages were found to be fraudulent in 2011, more than double found in 2006 when figures began, Experian said.
There was a 4% increase in financial services application fraud overall , which was also driven by a growth in insurance and current account fraud, the study said.
The latest figure marks the fifth annual mortgage fraud increase in a row with 93% of such attempted scams due to people “misrepresenting” their personal information on applications, most commonly by trying to cover up a poor credit history, or making false claims about their employment status or the state of their finances.
Mortgage availability is expected to dip in the coming months as lenders tighten their borrowing criteria amid the weak economy. Several lenders have already announced mortgage rate rises, affecting more than a million people in total.
Stricter mortgage lending rules will also come into place under plans by the Financial Services Authority (FSA) to ensure there is no return to irresponsible lending and borrowers can only take out deals they can afford, without allowing on house price rises.
Nick Mothershaw, a fraud director at Experian, said the rises in mortgage fraud will tend to have come from “financially stressed segments of society.
For further information visit the Experian website.
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