You lied about applying for a home loan? You’re not alone

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Buying a home can be a daunting process. For most Australians, this is one of the biggest financial investments you can make in your life, and when you imagine your family in a new home, it’s hard not to get emotionally invested in it. purchase.

With so much at stake, it’s understandable that many feel the urge to lie when faced with a mortgage eligibility assessment.

According to a recent Experian study, a quarter of Australians looking for home loans deny the truth when they apply. Most of those who admitted to lying believe they would be judged unfairly or that it would be too damaging to their chances of approval if they were completely honest.

The most common lies from mortgage seekers 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 Australian Bureau of Statistics (ABS) loan indicator figures show substantial increases in loan commitments. In April 2021, there was an additional 3.7% increase from March’s record $ 30.2 billion.

Mortgage loan commitments accepted by the borrower

Total financial commitment (Billions) Percent change of the month 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 could potentially tell lies in order to take out mortgages that they are actually unable to pay.

“It is very important that people provide the correct information on their request, whether it is a phone plan or a home loan,” said Mathew Demetriou, Managing Director of Business Intelligence at Experian for ANZ. “If you don’t, the lender can’t fully understand your financial situation, and that could hurt you in the long run. “

Despite the prevalence of false truths on loan applications, 1 in 5 Australian consumers believe it is the credit provider’s sole responsibility to give someone a line of credit that is within their means, with less money. ‘a third party thinking it is up to the individual to know what they can afford. Another third think it is the responsibility of both parties, but with greater responsibility for the credit provider.

Demetriou added that “withholding information presents challenges for lenders in responsible lending practices. Without a clear picture of a client’s finances, lenders cannot be sure they are offering that person suitable credit.

While 40% of consumers attribute responsibility for the proper financial controls to the institution, Experian’s 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 providers need to assess their origination process and consider how they can improve the accuracy of data at the time of acquisition. “.

For more information on home loan rates, borrowing numbers and more, check out our Australian Home Loan Statistics Center.

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