A UBS survey of 907 Australians who took a mortgage in the past 12 months found that just 67 per cent said their application was completely factual and accurate versus 72 per cent a year ago.
By channel, the level fell to 61 vs 68 per cent for brokers and to 75 vs 78 per cent for bank branches. For NAB, the level fell to 62 per cent and for ANZ it fell to 55 per cent.
And while APRA has again clamped down on risky lending this year, 46 per cent said it was easier to get a mortgage compared to 17 per cent who said it was harder than previous experiences.
Equally disturbing from a policy standpoint is the fact that Respondents also said there has been no increase in the amount of supporting documentation and verification required.
“Despite recent macroprudential policies, the findings of this survey and the fact that mortgage approvals remain at record levels implies that there is little evidence mortgage underwriting standards have been tightened through the eyes of the consumer,” UBS analyst Jonathan Mott says.
Given the rising level of misstatement over multiple years, he estimates banks now have about $500 billion of factually inaccurate mortgages or “liar loans” on their books. The term was used in the US during the Financial Crisis for mortgages where documentation was not accurate.
“While household debt levels, elevated house prices and subdued income growth are well known, these finding suggest mortgagors are more stretched than the banks believe, implying losses in a downturn could be larger than the banks anticipate,” Mr Mott says. “We are underweight Australian banks and are very cautious the medium term outlook.”
Lol, go you good thing. Just imagine what it’s going to be like when the bubble busts and real lending standards return. From the AFR:
The amount of home loans that have been extended based on “factually inaccurate” information is estimated to have reached $500 billion, according to an updated study by investment bank UBS.
The broker said that its latest survey of over 900 mortgage applications originated over the last 12 months revealed that about one third of home loans contained information that was not accurate, a significant increase compared to around 28 per cent in 2016.
Given the “rising level of misstatement” of many years, UBS said it estimated $500 billion of home loans were “liar loans”, the researchers, Jonathan Mott, Rachel Bentzvelen and George Tharenou wrote.
“While household debt levels, elevated house prices and subdued income growth are well known, these finding suggest mortgagors are more stretched than the banks believe, implying losses in a downturn could be larger than the banks anticipate.
The broker said it was “underweight” Australian banks and cautious of the outlook.
Housing bubbles like that in Australia simply are not possible without rampant fraud.