Mortgage fraud increases by 23 per cent

| August 22, 2012 | 0 Comments
Mortgage fraud increases by 23 per cent

Information services company Experian has reported a 23 per cent increase in the number of people giving false information in order to obtain a mortgage.

In the second quarter of this year, 39 out of every 10,000 mortgage applications were found to be fraudulent, compared with 32 in the 2011 second quarter.

Lenders have tightened up their lending criteria substantially since the credit crunch and the increase in fraud is believed to reflect the difficulty experienced by many would-be house owners in securing a mortgage.

The situation is particularly difficult for first-time buyers, with few low-deposit mortgages available.

James Jones, head of consumer affairs at Experian, said: “The increase certainly reflects the fact that many households are increasingly cash-strapped and resorting to ever more desperate measures.

“Nearly a quarter of mortgage fraud is due to people inflating their incomes.”

Other types of mortgage fraud include concealing a bad credit history, giving inaccurate employment information and giving misleading information about how the property will be used.

The rental market is booming and some mortgage applicants have indicated that they plan to live in the property themselves when they really intend to rent it out.

Meanwhile, the latest figures from the Council of Mortgage Lenders reveal an 8 per cent in mortgage lending last month.

Mortgage lending totalled £12.7 billion in July, compared with £11.7 billion in June.

The August 2012 figure is 2 per cent higher than the level of mortgage lending recorded in August 2011.

However the CML has warned that the improvement may reflect a seasonal rise, with the Olympics and the Queen’s Diamond Jubilee affecting the numbers.

CML market analyst Caroline Purdey said: “Gross mortgage lending showed an 8% increase from last month, continuing the see-saw pattern seen throughout this year, albeit against a broadly flat market.

“Interpretation of recent trends continues to be challenged by one-off effects.

“We look forward to the September figures when the distorting effects of the Diamond Jubilee and the Olympics should largely have worked their way through.”

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