A UBS survey of more than 1,200 mortgage holders who have taken a loan out in the past two years has found that 28% said their applications were not factually accurate.
More shockingly, 41% of those who secured a mortgage through a broker said their broker encouraged them to misstate information in the application.
This was a large proportion compared to those who secured their mortgage through the banks. Of this group, only 13% said their banker suggested they misrepresent their details.
The following table looks at the percentage of incorrect claims made to both brokers and banks by those who claimed to have given false information.
| Misrepresentation |
Brokers |
Banks |
| Over-represented household income |
18% |
5% |
| Over-declared other assets |
14% |
11% |
Under-represented other financial commitments
(e.g. mortgages, personal loans, credit cards) |
18% |
12% |
| Under-represented living costs |
26% |
25% |
A systemic problem?
Looking at the types of mortgage holders prone to providing false information, the report found they were more likely to be credit card revolvers, spend a larger proportion of their income, or face an unresolved financial challenge.
UBS analysts found that there were similar levels of misrepresentation from 2015 to 2016. This was also true when comparing whether the buyer was an owner occupier or an investor or the different ratios of house prices versus disposable income.
This “suggests to us that misrepresentation of mortgage applications is not contained to a particular part of the Australian housing market, and may be systemic,” they wrote.
Understated
“It is difficult to reject these findings, in our view,” the analysts said. “It is highly unlikely that the respondents would have stated they misrepresented their mortgage documentation when they were in fact truthful.
“If anything, we believe it is more likely these figures may understate the level of misrepresentation in mortgage applications as some respondents may not want to state they were less than completely accurate despite anonymity.”
Brokers are winning
One positive trend from the report was that brokers were more successful in lead conversion than the banks. While 60% of customers secured their mortgages via a broker, only 40% did so through the banks. This was despite 80% of customers discussing home loans with the banks.
This highlighted the difficulty banks generally have converting discussions into sales, the study analysts wrote.
