Sneaky way Aussies are securing home loans

Fortiro works with big banks and lenders to detect fraudulent documents.

Co-founder Sean Quagliani told news.com.au that there had been a “three fold increase in suspicious documents” since interest rates began rising last year. 

Fabrications about employment, earnings and spending habits were the most common lies being detected.

Mr Quagliani attributes the behaviour to two main factors – financial pressure and the ease with which people can now manipulate documents online.

“As house prices keep increasing there is increased competition for houses and more is needed to secure a home,” he said. 

Mr Quagliani said cost of living pressures were hurting everyday Australians and that was increasing the amount of lying on applications.

But he also said it was becoming “very easy” to manipulate and fabricate documents.

Mr Quagliani described fraud as a “cat and mouse game”.

“Every lender is always evolving their capabilities to be able to verify what people are sharing as part of their applications,” he said.

He noted rules exist to create a financial services system that protects people and also creates a level playing field that everyone has confidence and trust. 

“No individual and lender wants to be in a position where you are in a hardship, that is a painful process for everyone involved,” he said. 

A survey by investment bank UBS found that 55 per cent of respondents who had taken a mortgage with ANZ in the six months to December 2021, well before most of the interest rate hikes, had made false representations on their application.

More than half of Aussies who took out a new home loan with one of the major banks lied about their circumstances on the advice of their banker to make sure their loan was approved, the research revealed.

“We think this is particularly concerning, given ANZ’s persistent declines in mortgage market share, and the fact that 81 per cent of the 93 respondents who misrepresented their ANZ originated loan claim they were advised to do so by their banker,” said UBS analyst John Storey in the analysis.

ANZ’s high rate of applications where borrowers weren’t truthful bucked the overall trend that showed “liar loans” had decreased somewhat from 37 per cent in 2021 from a record 41 per cent in 2020.

As for the other major banks, Westpac had 40 per cent of customers admit to lying on their application in the UBS survey, while 30 per cent did at Commonwealth Bank and 19 per cent at National Australia Bank, which saw a dramatic drop from 46 per cent in 2020.

Overall, the main misrepresentation made on applications were “under-represented living” costs”.

An ANZ spokesman said its delinquency rates have gone down for several years.
“Our numbers are as good as, if not better, than our peers, which provides a strong indicator of ANZ’s capacity to accurately verify loan applications,” he said.

This week Australian homeowners were dealt some welcome relief right before Christmas with the Reserve Bank (RBA) sparing them from more mortgage pain.

On Tuesday afternoon, Australia’s central bank chose to pause interest rates at the final meeting of 2023 amid signs of inflation slowing down.

It follows last month’s decision, which saw the RBA increase the cash rate to 4.35 per cent in a shock to Australian households — the first rise in four months.

The next RBA board meeting isn’t until February, which means mortgagees have some breathing room.

The cash rate remains at 4.35 per cent.

That’s still a far cry from the historic low of 0.1 per cent Australians enjoyed during the Covid-19 pandemic.

-with Sarah Sharples, Alex Turner-Cohen