Perth property: Australians lying about personal details to secure home loan
A survey has revealed that a shocking number of Aussies are lying about their personal details to secure a home loan as interest rates continue to rise.
The Finder survey of 1,114 respondents (310 of whom have a mortgage) found that at least one in eight people lied on their home loan application forms.
The research found an alarming 4 per cent of Aussie mortgage lenders admitted to lying about their income.
The same proportion (4 percent) lied about how much debt they had during the application process.
Richard Whitten, home loan expert at Finder, said telling the truth during the home buying process was a recipe for disaster.
“Falsifying information on a mortgage application can have serious consequences. Not only could this potentially qualify as fraud, but it could also lead to the loss of your home in a worst-case scenario.
“While the lies may go unnoticed, the financial burden of an unaffordable loan can cause a lot of stress.”
Whitten said it’s not entirely surprising that house hunters lie about their finances.
“As housing affordability weakens, Aussies fear being rejected and missing out on the property ladder.
“While small inaccuracies may not be the end of the world, if a lender finds a major discrepancy in the figures you’ve given them or if you’ve outright lied about your financial position, the consequences can be severe.
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“Home loan contracts typically contain wording around providing misleading or incorrect information to a borrower. At worst, lying on a mortgage application is grounds for an event of default, which means the lender can sell your property.
“Legalities aside, you put yourself in a risky position if you lie on your application and borrow more than you can afford.”
Whitten urged Aussies not to inflate income figures or omit a loan or credit card when applying for a home loan.
“It’s important to track expenses as people sometimes forget where their money goes.
“Lenders cross-check everything and applicants who intentionally provide incorrect information can potentially get a black mark on their credit score, and in severe cases, applicants can have their loan called in, meaning they have to repay the loan in a hurry.”
Australians already struggling with the cost of living crisis are bracing for further pain when their fixed rate mortgages end this year.
One fifth of mortgage holders who signed up for a home loan during the pandemic period of ultra-low interest rates will have their fixed rates rolled over by the end of the year.
Most of the loans made during that period were concluded at interest rates of between 1.75 percent and 2.25 percent.
That increase almost cemented further increases, likely 25 basis points in both February and March, ANZ senior economist Catherine Birch said.
Further increases from the central bank will only exacerbate the issue as fixed rate borrowers can expect their rate to more than double to around 5 to 6 percent.
Finance Minister Katy Gallagher said she was “aware” of the impact this would have on homeowners and businesses.
“We’ve always said 2023 will be a challenging year, dealing with the inflation challenge for the government is a key economic challenge,” she told ABC Radio.
But despite warnings that further interest rate hikes could send the economy into recession, the Finance Minister admitted Australia was not immune to the global challenges.
“We don’t pretend that there are no challenges… but we also have very low unemployment, we get good prices for the things we sell,” she said.
“The government must remain focused. It is clear that we have a budget to land. And we are in the middle of doing that.
“Some of those decisions are really key to making sure we work with the Reserve Bank, not against it, and to support the economy where we can.”
Health and cost of living relief would be a major focus of the budget, Senator Gallagher noted.