Scribd Logo
Upload

Welcome to Scribd!

  • 40 views

    Surge in Liar Loans' From Major Aussie Bank Is Concerning'

    Uploaded by

    Rajiv Raj
    More than half of Australians who took out new home loans with one major bank lied about their circumstances to get approved, according to a new survey. Specifically, 55% of borrowers from ANZ made false claims. This rate is concerning given ANZ's declining market share. While the overall rate of "liar loans" decreased, understating living expenses was the most common falsehood. The findings underscore concerns about mortgage stress as interest rates rise. However, over half of homeowners are ahead on repayments and have savings buffers, suggesting the housing market remains robust despite risks.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Surge in Liar Loans' From Major Aussie Bank Is Concerning'

    Uploaded by

    Rajiv Raj
    40 views6 pages
    More than half of Australians who took out new home loans with one major bank lied about their circumstances to get approved, according to a new survey. Specifically, 55% of borrowers from ANZ made false claims. This rate is concerning given ANZ's declining market share. While the overall rate of "liar loans" decreased, understating living expenses was the most common falsehood. The findings underscore concerns about mortgage stress as interest rates rise. However, over half of homeowners are ahead on repayments and have savings buffers, suggesting the housing market remains robust despite risks.

    Original Title

    Surge in ‘liar loans’ from major Aussie bank is ‘concerning’

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    More than half of Australians who took out new home loans with one major bank lied about their circumstances to get approved, according to a new survey. Specifically, 55% of borrowers from ANZ made false claims. This rate is concerning given ANZ's declining market share. While the overall rate of "liar loans" decreased, understating living expenses was the most common falsehood. The findings underscore concerns about mortgage stress as interest rates rise. However, over half of homeowners are ahead on repayments and have savings buffers, suggesting the housing market remains robust despite risks.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    40 views6 pages

    Surge in Liar Loans' From Major Aussie Bank Is Concerning'

    Uploaded by

    Rajiv Raj
    More than half of Australians who took out new home loans with one major bank lied about their circumstances to get approved, according to a new survey. Specifically, 55% of borrowers from ANZ made false claims. This rate is concerning given ANZ's declining market share. While the overall rate of "liar loans" decreased, understating living expenses was the most common falsehood. The findings underscore concerns about mortgage stress as interest rates rise. However, over half of homeowners are ahead on repayments and have savings buffers, suggesting the housing market remains robust despite risks.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 6

    By Michael Yardney (https://propertyupdate.com.

    au/author/michael/)
    May 18, 2022 A A A

    Surge in ‘liar loans’ from major Aussie bank is ‘concerning’

    Key takeaways

    (/) • More than half of Australian mortgage holders who took out a new home loan lied
    about their circumstances to make sure their loan was approved.
    Table of contents

    • According to UBS, the main misrepresentation is “under-represented living costs”.

    • 51% of homeowners are more than 3 months ahead on mortgage repayments.

    • Mortgage distress should be minimised to some extent by mortgage serviceability


    assessments.

    • Under these serviceability scenarios, borrowers should be able to accommodate


    higher mortgage repayment costs.

    More than half of Australian mortgage holders who took out a new home loan
    (https://propertyupdate.com.au/first-homebuyers-guide-to-loans/) with one of the major banks
    lied about their circumstances to make sure their loan was approved, shocking new research has
    revealed.
    The survey, conducted by UBS, revealed that 55% of Aussies who took out a home loan with ANZ
    (https://propertyupdate.com.au/anz-predicts-a-soft-property-landing/) in the 6 months to
    December 2021 made false representations on their application.

    During the period of booming house prices and fierce competition for properties which led to
    FOMO (Fear of Missing Out), it seems more Aussies pushed the envelope trying to borrow to the
    max – usually by fudging their declared living expenses.

    “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
    analysis.

    ANZ lost market share during the height of the COVID-19 pandemic when the bank was caught
    unprepared for a housing boom (https://propertyupdate.com.au/our-booming-housing-markets-
    have-been-integral-to-australias-covid-19-economic-recovery/) that saw mortgage demand
    skyrocket.

    Turnaround times slowed, and faster lenders stepped in to snatch market share from the bank.
    And the numbers are disappointing given the survey shows that the overall ‘liar loan
    (https://propertyupdate.com.au/how-the-crackdown-on-liar-loans-will-affect-you-as-a-property-
    investor/)’ trend actually decreased to 37% in 2021, from 41% in 2020.

    But, as they say, there’s more…

    As for the other major banks, the analysis showed that 40% of Westpac customers had lied on
    their application, while 30% did at Commonwealth Bank and 19% at National Australia Bank.

    What are people lying about on their home loan applications?


    The main misrepresentation was “under-represented living costs”, according to UBS.

    The news is particularly concerning at a time when the Reserve Bank has officially begun hiking
    rates.

    The 0.25% hike in May is the first increase mortgage-holders have experienced in 12 years.

    And the increase comes with a warning that there are many more hikes to come
    (https://propertyupdate.com.au/big-banks-update-rba-forecasts-how-high-will-interest-rates-now-
    go/).

    You see, even a 1% rise could add hundreds of dollars a month in repayments on the average new
    mortgage.

    So mortgage holders with ‘liar loans’ could be further stretched than we realise.
    But there is some good news
    The UBS survey also revealed some more promising data.

    It found that 51% of homeowners are more than 3 months ahead on mortgage repayments and
    25% have savings buffers and emergency funds to cover 7 to 12 months of repayments.

    Of course, the regular property pessimists are out there telling us our property markets are going
    to crash because of “mortgage stress.

    One analyst warned the country could be in for a “big shock” telling the Australian Financial Review:
    (https://www.afr.com/companies/financial-services/more-liar-loans-at-anz-than-other-banks-ubs-
    survey-20220426-p5ag70)

    “If 70% of customers are ahead on mortgage repayments, that means 30% of people are not,
    which I think is pretty worrying.”

    “When you add up the fact that people are misrepresenting their income to get loans, we
    could be gearing up for a big shock.”

    But I don’t agree.


    Australia’s property market will continue to be propped up by the fact that close to 70% of
    properties are owned by homeowners and around half of these have no mortgage against their
    home.

    In fact, the total value of Australia’s residential real estate market is close to $10 trillion and is only
    a total of around $2 trillion in debt against this.

    Sure some young first homeowners have loan commitments of more than 30% of their income -
    the definition of mortgage stress but they tend not to sell up when things get tough – they would
    rather eat Maggi noodles than sell their homes.

    And in line with what the survey shows, we know that those who do have a mortgage are well
    ahead in their mortgage repayments (https://propertyupdate.com.au/10-reasons-why-our-
    property-market-wont-crash/).

    In fact, it is estimated that a total of $1.37 billion is sitting in offset or redraw accounts.

    Also remember that mortgage distress should also be minimised to some extent by mortgage
    serviceability assessments at the time of the loan origination since banks have, in general, been
    very conservative when it comes to stress testing.
    All borrowers would have been assessed to repay their mortgage under a scenario of mortgage
    rates being 2.5 percentage points higher than the origination rate, and since October last year,
    borrowers were being assessed at mortgage rates of 3 percentage points higher.

    Under these serviceability scenarios (https://propertyupdate.com.au/whats-ahead-with-the-


    australian-property-market-with-inflation-rate-rises-and-mortgage-stress/#serviceability-
    assessments), borrowers should be able to accommodate higher mortgage repayment costs,
    although such a rapid rate of inflation could create some challenges for borrowers with thinly
    stretched budgets.

    Combine this with the fact that the average Australian is wealthier than ever, our economy is
    robust, wages are rising, there is a dire supply shortage ahead, and migration is about to pick up
    and it’s clear our property market is in good shape.

    About Michael Yardney (https://propertyupdate.com.au/author/michael/)


    Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on
    their wealth through independent, unbiased property advice and advocacy. He's once again been voted
    Australia's leading property investment adviser and one of Australia's 50 most influential Thought
    Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au
    (https://metropole.com.au)

    'SURGE IN ‘LIAR LOANS’ FROM MAJOR AUSSIE BANK IS ‘CONCERNING’' HAVE NO COMMENTS

    Be the first to comment this post!

    WOULD YOU LIKE TO SHARE YOUR THOUGHTS?

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy