The CML (Council of Mortgage Lenders) has published a report highlighting an increase in the number of fraudulent applications, mainly from buy-to-let property investors.
Prior to the credit crunch it was relatively easy for someone on no income to obtain a 100% mortgage for buy-to-let simply by stating what they expected their future income to be. Now times have changed, anyone wanting a mortgage for buy-to-let needs at least 25% deposit and they have to have an income.
But, some investors seem to be making false statements on applications, either by “forgetting” to mention an outstanding loan or credit card balance, or incorrectly stating their self-employed income.
Many mortgage lenders are now investigating applications and carrying out more detailed checks to prevent the fraud. In some cases the lenders will even employ third party companies to analyse the application and check against credit files for any discrepancies.
Overall this is good news in that it will reduce the number of risky mortgages, however there needs to be a balance. Whilst credit needs to be carefully reviewed before approving an application, if lenders look for “any excuse” not to lend then it will depress house prices as there will be less buyers. Another factor to consider is rental remand, as the UK population grows there will be an increased rental demand, if there are insufficient buy-to-let properties this will increase the cost of renting.
