As much as 23% of millennials are lying on their mortgage application and think it is justified, according to what was found out by Equifax. They truly think that there is nothing wrong with inflating their income on their mortgage applications.
Eye Opening Survey
Equifax’s latest survey reveals that approximately 23% of millennials who are applying for mortgage thinks it is acceptable to inflate their annual income so that they can qualify for the mortgage they are applying for. Note that Equifax’s survey is about mortgage fraud.
Equifax surveyed 1,545 Canadians from across the country. 23% of millennials think inflating one’s income is totally fine. Almost double from the 12% who think the same from the entire population.
In a press release, Equifax Canada director of consumer advocacy Julie Kuzmic says that inflating income or manipulating it in any way for a mortgage application is fraud. Calvin Barry, a Toronto criminal lawyer also said that, "it can also become a problem because people may take mortgages they can’t truly afford and end up spreading themselves too thin and garnering debt that could spell trouble in the future."
A huge mortgage means bigger monthly payments. Failure to make monthly mortgage payments can have a negative impact on one’s credit score and credit history. Equifax Canada is one of the country’s main credit bureaus and provides Canadians with free credit reports.
19% of the millennials surveyed admitted that they are downright not truthful in their mortgage applications while some of the 18 to 34 year-old crowd said they thought exaggerating their information is acceptable. Michael Porter, a senior investigator with Haywood Hunt & Associates Inc. says people can end up facing a lot of legal consequences later if they fail on their mortgage payments.
More Survey Reveals
What is interesting is that 16% of those surveyed believe that mortgage fraud is a victimless crime. 23% of millennials surveyed share the same sentiments. More so, the survey found out that Canadians have not been checking their credit scores too. More than half of those surveyed revealed that they do not check what credit score they have before applying for a mortgage. The numbers are a bit better compared to 68% of Canadians who did not do the same in an old Equifax survey from 2014.
According to Erin Thompson of Homebase Mortgages, mortgage lenders require a minimum score of between 600 to 680 to get mortgage approval. She added that mortgage lenders often scrutinize various factors along with the credit scores. It is an industry-standard for lenders to check other factors such as a borrower’s income and ability to pay back a loan. She added that having a spotty credit history isn’t ideal if applying for a loan to receive funding for a huge purchase.
The survey’s findings are concerning because of what it means for the mortgage industry overall. Traditional lenders already have a difficult time verifying borrower’s income because of how they are regulated; this adds another layer of challenges for both lenders and borrowers. Some respondents also stated that this behaviour could be because of the mortgage stress test for first time home buyers. The test renders a lot of young Canadians with little to no chance of buying a home.