A total of 43 out of every 10,000 mortgage applications are expected to be identified as fraudulent in 2013 which is a rise of 13% on 2012 figures and a 26% increase on 2011.
Nick Mothershaw, director of identity & fraud services at Experian in the UK and Ireland, said almost 90% of mortgage fraud tended to originate from genuine individuals misrepresenting their financial situations such as employment statuses and hiding adverse credit.
He said: “With tougher rules on UK mortgage lending set to come into force in 2014, where lenders will have to put a borrower's ability to repay under greater scrutiny, it important that they have the correct tools in place to do this especially as attempted fraud in this industry is set to increase significantly over the next 12 months.”
Meanwhile Experian’s latest fraud index revealed that attempted mortgage fraud in the third quarter of this year was up 6% on the same period in 2011 with 38 in every 10,000 applications deemed fraudulent. This is compared to 36 in every 10,000 12 months ago.
It is also the first time within the past year that mortgage fraud has overtaken current account fraud as the area targeted most frequently by fraudsters.
Mothershaw said it has never been more important to ensure that applications for new credit facilities are analysed for signs of fraudulent activity.
He added: “Simple steps organisations can take to mitigate risk include robust checking of new applications for credit using tools that reveal first party fraud and organised fraud rings.”
He said that lenders must continually reassess fraud risk across existing accounts and introduce measures to verify the true identity of applicants by asking questions only a genuine applicant will know on all products not just the higher risk ones.
