Around 20% of Australians are providing false information to banks when applying for loans.
That’s according to a report from Experian, the world’s largest credit reporting business.
Why are they doing it? According to reporting by the Australian Financial Review it’s because they don’t want to be rejected for a loan by the bank.
The stats revealed by Experian, according to a survey, show that just over 40% of lies on home loan applications related to understating living costs.
Around 20% of lies related to showing higher levels of income than they had actually generated.
Other lies included not disclosing a pregnancy, and also not telling the bank about an upcoming change of job.
The reporting also said that applications for services and products relating to buy now, pay later and credit card applications had inaccurate information.
What does this mean for the property market and the ASX share market?
At the moment, nothing. If there isn’t a painful increase in bad debts for the banks and if people can keep their heads above water then the current situation could continue for a long time.
Some of the biggest businesses on the ASX are National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Group (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).
The big four ASX banks alone make billions of dollars from the property market each year.
It’s not a good thing for the long-term health of the economy for large numbers of people to be taking on loans that they can’t afford.
However, a strong real estate market supports many other sectors in the Australian market such as homewares, construction, renovations and so on.
It’s a tough situation that is harder to resolve. Increasing lending standards could make it harder for some people to get a house.
But Australians need to be careful considering rising interest rates are looming. If loans are already unaffordable, it’s possible that those loans are just going to become harder to manage.
