One third of all home loans based on "lies": UBS

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Sep 12, 2017

One third of all home loans based on "lies": UBS

A UBS survey of 900 people who took out home loans this year, found that only 67 per cent said their application was "completely factual and accurate".

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Up to a third of Australian home loans could be "liar loans", says global investment bank, UBS.

UBS surveyed 900 Australians who took out home loans in 2017, and found that only 67 per cent said their application was "completely factual and accurate".

The survey follows on from a similar survey conducted in 2016, which revealed evidence of widespread fraud in mortgage applications.

In 2016, the survey found that 72 per cent of borrowers said their mortgage applications were "completely factual and accurate".

One quarter of the survey respondents in 2017 said their loan application was "mostly factual and accurate". Eight per cent said their applications were "partially factual and accurate". One per cent refused to answer the question.

The bank's report says the findings may in fact understate the extent of fraud, with many respondents unwilling to admit lying on their applications, even though the survey was anonymous.

The value of loans based on false information is $500 million, says UBS

UBS estimates that around $500 billion worth of loans misrepresent incomes, assets, debts, and expenses.

The most common lie was living expenses, with 30 per cent of respondents admitting they lied in this section of their application.

ANZ has the highest proportion of loans that contained "not completely factual and accurate" information, with NAB coming in second place.

Loans made through brokers had a much higher rate of "not completely factual and accurate" information than loans applied for personally.

NSW had the highest rates of "not completely factual and accurate" information, perhaps not surprising considering the astronomical rises in prices that have occurred in Sydney in recent years. Victoria and Tasmania were close behind.

UBS warned that banks may be more vulnerable to economic shocks than is widely believed because of the untrue information in mortgage applications.