There will be a dramatic increase in attempted mortgage fraud in the UK next year, bringing the number of people fraudulently trying to obtain home loans to the highest level since records began in 2009.
A total of 43 out of every 10,000 mortgage applications are expected to be identified as fraudulent in 2013, a rise of 13% on 2012 figures and 26% up on 2011, according to global information services company Experian. The majority of attacks are likely to continue to come from what is known as first party fraudsters, essentially individuals misrepresenting their own financial circumstances and employment statuses or attempting to hide adverse credit histories.
Experian’s latest Fraud Index, which highlights the evolving nature of the fraud threat facing the UK’s financial services sector, also reveals that attempted mortgage fraud in the third quarter of this year is up 6% on the same period in 2011. Figures show that 38 in every 10,000 applications were deemed fraudulent, compared to 36 in every 10,000 12 months ago. It is also the first time within the past year that mortgage fraud has overtaken current account fraud as the area targeted most frequently by fraudsters.
Quote from PropertyCommunity.com : “Buy to let mortgages in UK mortgage industry seem to be very popular in recent times. Lenders are offering various kinds of rates thereby competing with each other to make these home loans cheaper for landlords. The boost in the buy to let mortgage market is mainly due to a strong demand for rental properties and a positive outlook towards the housing market. Almost 38% of the landlords believe that rents have increased over the past 6 months.”
Overall, 17 in every 10,000 applications received by financial institutions in the third quarter of this year were detected to be fraudulent, some 7% more than the same time last year. ‘Almost 90% of mortgage fraud tends to originate from genuine individuals misrepresenting their financial situations,’ said Nick Mothershaw, director of identity and fraud services at Experian in the UK and Ireland.
He also pointed out that tougher rules on UK mortgage lending are set to come into force in 2014 when lenders will have to put a borrower’s ability to repay under greater scrutiny
‘Increased fraud levels in specific industries mean that it has never been more important to ensure that applications for new credit facilities are analysed for signs of fraudulent activity. Simple steps organisations can take to mitigate risk include robust checking of new applications for credit using tools that reveal first party fraud and organised fraud rings, continually reassessing fraud risk across existing accounts and introducing true identity authentication using facts only a genuine applicant will know on all products, not just the higher risk ones,’ he explained.