Mortgage fraud rises fifth year running

Yuan Phoon

April 18, 2012

This was an 8% rise compared to the previous year and is the fifth year in a row in which the rate of mortgage fraud increased.

In 2006, just 15 in every 1,000 applications were found to be fraudulent.

The overall rate of fraud at point of application across the UK’s financial services sector increased by 4% in 2011, to just over 17 in every 10,000 applications. In addition to record mortgage fraud figures, this overall increase was also driven by growth in insurance and current account fraud.

Some 93% of attempted mortgage fraud in 2011 was down to individuals misrepresenting their personal information on applications.

Typically these first party frauds involved falsifying employment status or financial information and – most commonly – attempting to hide an adverse credit history.

Experian’s demographic insight revealed that Mosaic groups, Terraced Melting Pot (young, poorly educated individuals living in small towns) and Suburban Mindsets (predominantly middle aged, middle and skilled working class individuals) were both responsible for around 15% of first party mortgage fraud cases in 2011.

Mosaic classifies consumers in the UK into 67 different types with shared, lifestyle preferences.

The young well educated professionals of the Liberal Opinions group were also prone to attempting first party mortgage fraud, being responsible for 13% of cases.

Nick Mothershaw, UK&I director of identity & fraud at Experian, said: “About 70% of financial services application fraud in the UK fraud is down to first parties misrepresenting their circumstances and the products such as mortgages and insurance that have seen fraud soar over the last year have a significant first party fraud element to them.

“This kind of fraud tends to originate from financially stressed segments of society.”

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