‘Liar loans’ most prevalent at ANZ, survey finds

By Jon Bragg

April 28 2022
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UBS has identified an increase in factual misstatements coming from ANZ’s mortgage customers.

A survey of residential mortgage customers conducted by UBS has revealed that 55 per cent of those who took out a home loan with ANZ during the last six months had made misstatements on their mortgage application.

This was in contrast to the slight improvement in the share of misrepresented loans identified overall to 37 per cent, down from 41 per cent in 2020.

“We think this is particularly concerning, given ANZ's persistent declines in mortgage market share, and the fact that 81 per cent of the 93 respondents who misrepresented their ANZ originated loan claim they were advised to do so by their banker,” UBS said.

“ANZ's continued deterioration is at odds with the broader improvement in bank originated loan factual accuracy in 2022 across other major and regional banks.”

Westpac had the next highest proportion of factual misstatements among the major banks at 40 per cent, down from 41 per cent a year earlier, while a decline from 36 per cent to 30 per cent was recorded for the Commonwealth Bank (CBA).

Notably, NAB saw a major decline in factual misstatements from 46 per cent in 2020 to just 19 per cent, while misstatements at other banks fell from 38 per cent to 33 per cent.

Around 62 per cent of respondents said that their banker had suggested they under or over represent on their mortgage application, up from 22 per cent a year ago.

UBS said it was “alarming” that 92 per cent of the 12 survey respondents who misrepresented their AMP originated loan had claimed that they were advised to do so by their consultant.

Suggestions to misrepresent were much lower among the other three major banks, including 44 per cent for Westpac, 40 per cent for CBA and only 21 per cent for NAB.

In terms of the areas of factual inaccuracy, 33 per cent of respondents said they had underrepresented living costs, 22 per cent had underrepresented financial commitments, 17 per cent overrepresented income and 17 per cent over declared other assets.

Are customers vulnerable to higher interest rates

UBS also explored the vulnerability of mortgage holders to looming higher interest rates and found that 51 per cent of respondents were three or more months ahead on their repayments and 42 per cent said that they had emergency funds to cover 3 to 6 months of repayments.

Additionally, 39 per cent of respondents said that their total household spend was well below their household income.

“Our overall conclusion is that front-book borrowers, which are arguably higher risk, have [the] capacity to withstand rising interest rates, although there are pockets where stress could emerge with RBA hikes exposing some vulnerability,” UBS said.

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