Australians are blithely lying to lenders to get the cash they need to buy a home, with as many as a third of mortgage applications containing deliberately false statements, according to a leading investment bank.
Only 67 per cent of borrowers surveyed by UBS rated their applications as "completely factual and accurate", with 32 per cent admitting to documents that were "mostly" or "partially" accurate.
UBS, which surveyed 907 borrowers who had taken out a loan over the past 12 months, said the remaining one per cent "would rather not say" how accurate their applications were.
False statements included saying they earnt more than they really did, inflating the value of assets, and under-estimating living expenses.
UBS estimates this means there is about $500 billion of so-called "liar loans" on banks' books.
"While household debt levels, elevated house prices and subdued income growth are well known, these findings suggest mortgagors are more stretched than the banks believe, implying losses in a downturn could be larger than the banks anticipate," UBS said in a report.
Only 55 per cent of respondents who took out a mortgage with ANZ either directly of via a broker said their application was completely factual and accurate.
Borrowers across both bank and broker channels reported no increase in requests for supporting documentation despite lenders being subject to increased regulatory intervention designed to rein in riskier loans.
Requiring borrowers to present ATO tax returns as verification of income represents an obvious starting point for cleaning up applications, UBS said.
"We believe that 26 consecutive years of GDP (gross domestic product) growth in Australia has led to a large level of complacency within the economy," UBS said.
"This survey suggests many people have come to take house price inflation as a given and are prepared to be factually inaccurate on their mortgage application to ensure they get access to housing leverage."
