Experian predicts that there will be a dramatic increase in attempted mortgage fraud in the UK next year. This will bring the number of people fraudulently trying to obtain home loans to the highest level since records began in 2009.

A total of 43 out of every 10,000 mortgage applications are expected to be identified as fraudulent in 2013, a rise of 13 per cent on 2012 figures and 26 per cent on 2011. The majority of attacks are likely to continue to come from first party fraudsters. Meanwhile, Experian’s latest Fraud Index also reveals that attempted mortgage fraud in the third quarter of this year is up six per cent on the same period in 2011, with 38 in every 10,000 applications deemed fraudulent, 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.

Overall, 17 in every 10,000 applications received by financial institutions in Q3 of this year were detected to be fraudulent – seven per cent more than the same time last year, with savings accounts seeing a rise of 58 per cent. However, attempted fraud in the automotive finance sector fell for the sixth consecutive quarter, with 15 in every 10,000 fraudulent applications discovered between July and September 2012, down 29 per cent compared with 2011.

Nick Mothershaw, director of identity & fraud services at Experian in the UK and Ireland, comments: “Almost 90 per cent of mortgage fraud tends to originate from genuine individuals misrepresenting their financial situations. 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. Increased fraud levels in specific industries mean that it has never been more important to ensure that applications for new credit facilities are analysed for signs of fraudulent activity. 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, continually reassessing fraud risk across existing accounts and introducing true identity authentication using facts only a genuine applicant will know on all products, not just the higher risk ones.”

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