But rising rates and homebuyer demand could bring them back up, Equifax Canada says
Mortgage fraud rates in Canada dropped significantly in 2024 but Equifax Canada said the positive trend may not last, especially as interest rates begin to fall and more first-time buyers enter the market.
Mortgage fraud rates fell from 0.46% in Q4 2023 to 0.19% in Q4 2024, marking a sharp year-over-year decline, according to Equifax Canada’s Q4 2024 report. However, fraudulent financial documents, including falsified bank statements and down payment information, remain a major issue, accounting for more than 90% of mortgage fraud cases.
“This decline in fraud rates might be temporary. As interest rates gradually decrease, a potential surge in first-time buyers in 2025 could lead to increased fraudulent activity in mortgage credit applications. Consumers may misrepresent their financial information in an attempt to secure the best possible rates,” Davies warns.
In Toronto, police investigated mortgage fraud cases where properties were listed or sold without the knowledge or consent of the rightful owners.
According to real estate attorney Daniel La Gamba, fraudsters use counterfeit identification and forged documents to secure mortgages in the names of legitimate property owners, who often remain unaware of the fraud until they receive payment demands for loans they never applied for.
“Even with all the safeguards in place... fraudsters are getting quite sophisticated in their ability to replicate ID, steal identity,” La Gamba told the Canadian Press. “Sometimes, we're really left with only our gut feeling. If something doesn't smell right, then we start digging and asking a few more questions.”
To combat growing fraud risks, the Financial Services Regulatory Authority of Ontario (FSRA) issued new guidelines requiring mortgage brokers to actively monitor and respond to fraud warning signs.
Antoinette Leung, FSRA’s Head of Financial Institutions and Mortgage Brokerage Conduct, emphasized that brokers must demonstrate due diligence in verifying a client’s identity and confirming their authority to mortgage a property.
“Anyone who notices these red flags should be following up and looking into them,” Leung said.
Concerns over financial fraud are rising among Canadians. Equifax Canada’s survey revealed that 89% of respondents believe companies must do more to protect personal data. Eighty-eight percent (88%) believe both financial institutions and the government must work together to combat financial crime. About 84% think the government should improve public fraud education, with 91% of seniors strongly supporting better awareness efforts, while 61% said banks should implement stricter security protocols. Fifty-nine percent (59%) believe companies should invest in more advanced fraud detection tools.
“Fraud prevention is a major concern for many Canadians. Research shows that every dollar lost to a fraudster costs individuals and banks significantly more money. Companies must act now to strengthen fraud protection,” said Carl Davies, head of fraud and identity at Equifax Canada. “Canadians, especially older adults, are demanding better safeguards to prevent financial crimes and identity theft.”
Read next: Why collaboration is more important than ever in combating mortgage fraud
While mortgage fraud rates declined in 2024, fraud in the auto financing sector is on the rise, particularly in Ontario. Equifax Canada’s data showed that the auto application fraud rate reached 0.26% in Q4 2024, marking a steady increase over the past two years.
Fraudulent auto loan applications were largely driven by falsified income statements and other first-party fraud schemes, which accounted for 80% of fraudulent applications. New-to-credit and new-to-Canada applicants were significantly more vulnerable, with fraud rates more than double those of established borrowers.
“As fraud tactics evolve, Canadians must remain vigilant,” Davies added. “By combining stronger corporate policies, government oversight, and personal diligence, we can make strides in fraud prevention.”
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