Vast majority of borrowers who lied on loan applications did so on the advice of their banker, survey finds
More than half of new mortgage borrowers with ANZ made misrepresentations on their loan applications in the second half of last year, according to a new survey from UBS. The survey found that the vast majority of those who made misrepresentations did so on the advice of their banker to ensure the loan was successful.
“We think this is particularly concerning, given ANZ’s persistent declines in mortgage market share, and the fact that 81% of the 93 respondents who misrepresented their ANZ originated loan claim they were advised to do so by their banker,” UBS analyst John Storey said in the report.
Storey said that ANZ’s uptick in these so-called “liar loans” was at odds with a more general improvement in accuracy in bank-originated loans for major and regional lenders, according to a report by The Australian. Storey said the report highlighted the troubles ANZ was having with its mortgage business.
ANZ lost market share during the height of the COVID-19 pandemic, when the bank was caught unprepared for a housing boom that saw mortgage demand skyrocket. Turnaround times slowed, and faster lenders stepped in to snatch market share from the bank.
UBS’s Australian Mortgage Survey polled 860 Australians who secured a mortgage between July and December 2021. Excluding respondents who wouldn’t state an area of factual accuracy, the survey’s “under-represented living costs” and “other” categories saw the biggest hikes in factual inaccuracies on mortgage applications, The Australian reported.
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However, the report found that there was an overall decline in the proportion of liar loans, from 41% in 2020 to 37% in 2021.
With interest rate hikes looming, UBS noted an increased focus on affordability, savings buffers and the capacity of household balance sheets to absorb higher rates, The Australian reported. The survey found that new mortgages have capacity, through savings, prepayments and emergency funds, to absorb a greater cost burden – though it noted there are still pockets that could see mortgage stress if the Reserve Bank hikes rates.
