Did you lie on a mortgage application? You’re not alone

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Buying a home can be a daunting process. For most Australians, it’s one of the most important financial investments you’ll make in your life, and when you picture your family in a new home, it’s hard not to become emotionally invested in the purchase. .

With so much at stake, it’s understandable that many feel the need to tell white lies when faced with a home loan eligibility assessment.

According to a recent study by Experian, a quarter of Australians looking for a mortgage deny the truth when applying. Most of those who have admitted to lying believe that they would be judged unfairly or that it would hurt their chances of approval too much if they were completely honest.

The most common lies told by mortgage applicants are:

  • 29% did not disclose an upcoming job change.
  • 28% underestimated their existing debts.
  • 21% overestimated their annual income.
  • 19% said they were expecting a child.

What is the long-term impact of lying on a loan application?

This trend is potentially concerning, as the value of loan approvals is higher than ever. The most recent figures from the Australian Bureau of Statistics (ABS) Lending Indicators show substantial increases in loan commitments. In April 2021, there was a further increase of 3.7% from the March record of $30.2 billion.

Real estate loan commitments accepted by the borrower

Total financial commitment (billions) Monthly percentage change Annual percentage change
March $30.2 5.5% 55.3%
April $31.06 3.7% 68.2%

Data source: ABS

With the current housing boom in Australian capitals, data from Experian indicates that some homebuyers entering the market may possibly be telling lies in order to take out mortgages they are actually unable to pay.

“It’s so important that people provide correct information on their application, whether it’s for a phone plan or a home loan,” said Mathew Demetriou, Experian’s managing director of business intelligence for ANZ. “If you don’t, the lender can’t fully understand your financial situation, and it could hurt you in the long run.”

Despite the prevalence of lies on loan applications, 1 in 5 Australian consumers believe it is the credit provider’s sole responsibility to grant someone a line of credit that is within their means, less than a third party thinking that it is up to the individual to know what is going on. they can afford. Another third thinks it is the responsibility of both parties, but with more responsibility on the credit provider.

Demetriou added that “withholding information presents challenges for lenders as part of responsible lending practices. Without an accurate picture of a customer’s finances, lenders cannot be sure they are extending appropriate credit to that person. »

Although 40% of consumers attribute the responsibility for proper financial controls to the institution, Experian research also found that 75% of consumers believe a home loan application should be processed in just three days. Another 22% of this segment would expect to be approved for a home loan within 24 hours.

In order to meet customer demands, while properly assessing potential loan applicants, Demetriou said “credit grantors need to evaluate their origination process and consider how they can improve data accuracy at the point of acquisition.” .

For information on home loan rates, borrowing figures and more, check out our Australian home loan statistics hub.

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