The mortgage market experienced the second highest fraud rate during Q3 2010.
Some 27 in every 10,000 mortgage applications were detected as fraudulent, compared with 25 in every 10,000 in Q3 2009.
Some 96% of mortgage fraud attempts during Q3 were first-party frauds, which typically involves individuals attempting to hide adverse credit histories or misrepresenting their employment status to try and secure credit and other financial services which might not have been suitable for them.
Experian says there has been a surge in loan fraud over the past 12 months, with a 57% increase in fraudulent activity recorded during Q3 compared with the same period in 2009.
Loan fraud activity is now approaching pre-2008 levels, with seven out of every 10,000 applications identified as fraudulent.
In Q3 2010 first party fraud accounted for 73% of all incidents of fraud, up from 52% in Q3 2009.
The increases in first party fraud were particularly prevalent in loans, where first party fraud increased to 89% from 35% in Q3 2009, and current accounts, where first party fraud increased to 72% from 40% in Q3 2009.
Nick Mothershaw, director of fraud and identity solutions at Experian, says: “We have witnessed a rise in fraudulent activity across several sectors of the market in the last quarter when compared to Q3 2009. There has been a significant increase in automotive fraud compared to the same time last year and loan fraud is up by almost 60%.
“Increased fraud levels mean that it has never been more important to ensure that applications for new credit facilities are analysed for signs of fraudulent activity.
“Simple steps organisations can take to mitigate risk include robust checking of new applications for credit using tools that reveal first party fraud and organised fraud rings, continually reassessing fraud risk across existing accounts, and introducing true identity authentication using facts only a genuine applicant will know on all products, not just the higher risk ones.”