The credit referencing agency, Experian, has released data that they suggest clearly shows a consistent rise in the cases of fraudulent applications made for mortgages and insurance products during 2012. The figures show that for every 10,000 cases submitted, 38 of these included falsified information, a figure that has increased from 35 in 2011. Perhaps most notably, the number of fraudulent cases has doubled in comparison to that of 2007 when, prior to the credit crunch, there were 18 fraudulent cases recorded per 10,000.

Experian’s evidence suggests that in nine out of every ten of these cases, the applicant looked to improve their chances of a successful application by adapting their personal circumstances to fit the lender’s requirements. Reportedly, the most consistent attempts to alter the truth were cases where the applicant’s credit history was below the par required. Lenders also noted widespread falsified statements relating to employment or financial stability.

Commenting on his company’s findings, Nick Mothershaw, the UK director of identity and fraud for Experian, said: "As a result of poor or patchy credit, more and more 'non-professional' fraudsters are clearly attempting to ease their position, misrepresent applications or make exaggerated claims over their income and personal finances. Mortgages, current accounts, insurance and cards will continue to come under pressure from fraudsters who are keen to get their hands on cash facilities."

Looking further into the data, there is a clear set of figures that show the most prone social classes involved in fraudulent applications were the middle and skilled working classes, with the optimum age range appearing to be around middle-age. Simon Butler, of Contractor Mortgages Made Easy, suggested that part of this could be to do with some of the major changes that the market has seen over the past 2-3 years: “With the withdrawal of self-certified options and the sub-prime sector shrinking drastically, it’s likely that borrowers are feeling the need to try alternative routes to arrange the mortgage they require.”

But Butler pointed out that fraudsters will struggle more than ever to get past the stricter underwriting which is now in place. He said: “What many applicants do not realise is that lenders are often looking for a reason not to lend. On that basis, the checks are so rigorous, that if there is even a suggestion that an applicant has tried to cover up a missed payment here, or a regular outgoing commitment there, it doesn’t take too much effort to find it. Ultimately, a link to fraudulent activity will put you on a watch list, which could result in long term, almost irreparable damage to a credit record.”

In addition to the mortgage based fraud cases, insurance fraud rates were also on the up. The figures demonstrated an increase from 5.44 for every 10,000 cases back in 2007, to 12 in every 10,000 for 2012. On that point, the date stated that 86% of all frauds for the insurance sector were due to information supplied by applicants in the application process or during making a claim.

Overall, the agency confirmed that those in urbanised occupations were responsible for the most first party fraud, with 21% attributed to this cross section of applicants. Referred to as “Terraced Melting Pot”, this group came only second to another Experian referred to as the “Liberal Opinion” group. This largely consists of individuals classed as young professionals and the well-educated, with 14% of first-party fraud cases linked to this area. As a whole, 70% of cases introduced via the financial services industry were attributed to the applicants not wholly disclosing, or falsifying integral information on their application.

Article by: Lucy Edmunds, Media Executive at Contractor Mortgages Made Easy

Media Contact: Raman Kaur, Public Relations Manager

Tel: 0844 44 88 80

Email: media@contractormortgagesuk.com