Fewer Canadians are fibbing their way into a mortgage

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeReal EstateMortgagesFewer Canadians are fibbing their way into a mortgageIt’s no coincidence that Ontario, which has some of the highest home values in the country, also has the highest mortgage application fraud rateLast updated 41 minutes ago Fraud losses cost lenders millions, for which everyone ends up paying somehow, whether through higher rates, more restrictive lending policies or otherwise. Photo by Getty ImagesOnly one in 500 mortgage applications is fraudulent, according to Equifax Canada‘s latest second-quarter data.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThat’s a mere 0.20 per cent fraud rate, which is almost suspiciously modest.Such a low number may surprise many mortgage advisors, based on what lands on their desks each month.But if Equifax is right and mortgage fraud is indeed on the decline, we’ll take the win.This advertisement has not loaded yet, but your article continues below.Fraud losses cost lenders millions, for which everyone ends up paying somehow, whether through higher rates, more restrictive lending policies or otherwise.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againShrinking mortgage fraud seems to be a trendThat 0.20 per cent is meaningfully below the 0.26 per cent logged a year ago.What’s more, the mortgage application fraud rate for all of 2025 was 0.30 per cent, down 16 per cent from 2024.So why are fewer people skirting the rules?As near as I can figure, there may be six reasons, and this list isn’t exhaustive:First, Equifax partly credits population contraction and sluggish credit demand: fewer borrowers equals fewer fabrications. (Although that explains the absolute dip in fraud more than the falling fraud rate.)Second, improving affordability lessens the need to lie. In particular, the advent of 30-year amortizations on default-insured mortgages helped by lowering payments and making it easier to qualify.Un-fun fact: It’s no coincidence that Ontario, which has some of the highest home values in the country, also had the highest mortgage application fraud rate by a long shot, at 0.28 per cent. Equifax has Alberta as the runner-up at 0.19 per cent.This advertisement has not loaded yet, but your article continues below.Third, fraud skews toward people without a mortgage, so 2026’s higher share of renewals means there were fewer applicants needing to fib their way to an approval.Fourth, fewer bidding wars and less urgency mean fewer marginal buyers stretching to get in.Fifth, lenders are getting better at detecting fraud, and borrowers are getting the message.Lastly, bad actors may be drifting toward non-mortgage credit, where the pickings are easier.Mortgages differ from products like credit cards, where the fraud rate is 355 per cent higher — and climbing.“The major types of fraud we track — like using fake identities or rapidly taking out multiple loans — rely on speed,” Equifax says. “Criminals want to secure cash quickly and disappear before the banking system flags them.”“Mortgages require weeks of background checks, appraisals, and paperwork, making them highly impractical for these fast-paced, hit-and-run schemes.”What drives fraud?An Equifax spokesperson told me that today’s mortgage fraud is “almost entirely first-party misrepresentation.”In plain English, he said, it’s mainly applicants “misrepresenting their own financial or personal information” to get approved.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Often it’s income and employment fraud: applicants inflate earnings, falsify employment status or invent a job outright — self-promotion in its purest form — to qualify for a larger loan.Or it could be asset and down-payment fraud, where applicants disguise where their down payment really came from to dodge lender rules against using borrowed money.I have no hard data, but I’m guessing the latter happens multiple times per business day in this country. In terms of seriousness, many borrowers rank it below rolling a stop sign.Equifax says it’s common for such applicants to “take out an undisclosed personal loan but submit paperwork claiming the funds are a non-repayable gift from a relative.”The worst offendersA much smaller group of miscreants — the rottenest of the bad apples — have more sinister motives.“Fraudsters are now using AI to create flawless synthetic identities that easily bypass standard initial checks,” says Carl Davies, head of fraud and identity theft at Equifax Canada.“So, while our point-of-application metrics look stable, those undetected scams haven’t disappeared — they will simply materialize later as hidden credit losses.”This advertisement has not loaded yet, but your article continues below.That matters because, unlike fraud-for-shelter, which has a relatively low default frequency, criminal fraud for profit produces higher loss rates.Does fraud ever pay?A dishonest borrower who isn’t caught may get the mortgage approval and take a quiet victory lap.But if they can’t qualify legitimately, there’s a good chance they can’t comfortably service that mortgage either, which raises their risk of default.Fortunately, lenders are getting sharper at picking off customers who lie.So, to anyone hoping to cheat the system: lenders are investing millions to detect your deception, and your AI document-manipulation tricks are old news to them.The mortgage industry also shares more data than it once did, making it somewhat easier — though still not as easy as it should be — to blackball bad borrowers.In the U.S., lenders include notices from the Federal Bureau of Investigation (FBI) warning that it’s a federal crime to make a false statement about income, assets, debt or identification, or to willfully overvalue property to influence a financial institution.This advertisement has not loaded yet, but your article continues below.These warnings state that the FBI investigates all fraud and that the crime can carry up to 30 years in federal prison, a $1 million fine, or both.Canada generally has no mandatory borrower notices from the RCMP or other authorities, but maybe it should. Few things sharpen an applicant’s memory of their real income or assets like the term “federal prison.”That said, the ultimate fraud buster would be electronic income validation directly from the Canada Revenue Agency (CRA).This game changer was proposed years ago, but Ottawa hasn’t given the CRA enough funding or pushed to prioritize the initiative. At this rate, we may all be commuting by air taxi before the feds get around to implementing it.Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.For the best national insured and uninsured mortgage rates, updated daily, please visit our mortgage rate page here.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.