Have you fibbed on a home loan application? You’re not alone

man applying for home loan

Buying a house can be an intimidating process. For most Australians, it is one of the most significant financial investments you’ll ever make in your life, and when you picture your family in a new home, it’s hard not to get emotionally invested in the purchase.

With so much on the line, it’s understandable that many may feel the need to tell white lies when facing an eligibility assessment for a home loan.

According to recent research by Experian, one-quarter of Australians seeking home loans bend the truth when lodging their applications. Most who admitted to lying believe that they would be judged unfairly or it would be too detrimental to their approval chances if they were completely honest.

The most common lies told by home loan applicants are:

  • 29% did not disclose an upcoming job change.
  • 28% understated their existing debts.
  • 21% overstated their annual income.
  • 19% withheld that they were expecting a child.

What’s the long-term impact of lying on a loan application?

This pattern is potentially concerning, as the value of loan approvals is higher than ever. The most recent Australian Bureau of Statistics (ABS) lending indicator numbers show substantial increases in loan commitments. In April 2021, there was an additional 3.7% increase on March’s record high of $30.2 billion.

Borrower-accepted home loan commitments

Total financial commitment (Billions)Month percentage changeAnnual percentage change
March$30.25.5%55.3%
April$31.063.7%68.2%

Data source: ABS

With the current property boom in Australia’s capital cities, Experian’s data indicates that some homebuyers engaging in the market could possibly be telling white lies in order to take on mortgages that, in reality, they are not in a position to pay.

“It’s so important for people to provide correct information on their application, whether it’s for a phone plan or a home loan,” said Experian’s general manager of decision analytics for ANZ, Mathew Demetriou. “If you don’t, the lender cannot fully understand your financial situation, and this could hinder you in the long run.”

Despite the prevalence of mistruths on loan applications, 1 in 5 Australian consumers believe it is the credit provider’s sole responsibility to give someone a line of credit that is within their means, with less than a third thinking it is up to the individual to know what they can afford. A further third think it is both parties’ responsibility, but with more onus on the credit provider.

Demetriou added that “withholding information presents challenges for lenders within responsible lending practices. Without an accurate picture of a customer’s finances, lenders cannot be sure they are providing credit that is appropriate for that individual.”

Although 40% of consumers put the responsibility of proper financial checks on the institution, Experian’s research also highlighted that 75% of consumers think a home loan application should be processed within only three days. A further 22% of that segment would expect to be approved for a home loan within 24 hours.

In order to meet the demands of customers, while still properly assessing potential loan applicants, Demetriou said that “credit providers need to be assessing their origination process and looking at how they can improve data accuracy at the point of acquisition.”

For more information on home loan rates, borrowing figures and more, check out our Australian home loan statistics hub.


  • 
  • Compare home loans - last updated 3 March 2024

    Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
    • Mozo Expert Choice Badge
      Home Fixed Rate

      Owner Occupier, Principal & Interest

      interest rate
      comparison rate
      Initial monthly repayment
      5.80% p.a.
      fixed 3 years
      5.91% p.a.

      Enjoy the security of a competitive fixed interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply). Mozo Experts Choice award winner.

      Compare
      Details
    • Straight Up

      Obliterate, Owner Occupier, Principal & Interest, <50% LVR

      interest rate
      comparison rate
      Initial monthly repayment
      6.24% p.a. variable
      6.24% p.a.

      Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.

      Compare
      Details
    • Offset Home Loan

      Package, Owner Occupier, LVR<60%, Principal & Interest

      interest rate
      comparison rate
      Initial monthly repayment
      6.15% p.a. variable
      6.40% p.a.

      Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

      Compare
      Details

    * WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

    ** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

    ^See information about the Mozo Experts Choice Home Loan Awards

    Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

    While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.