Experian has revealed that mortgage application fraud increased for the fifth year running, with 34 in every 10,000 applications proving to be fraudulent.

The credit reference agency also said that 93% of these false applications were a result of misrepresented information, with people attempting to conceal their poor credit history or financial state.

A precarious and unpredictable economy has a direct negative effect on mortgage availability, as lenders approach the market tentatively. A proven credit history is essential, and many borrowers are looking to hide the truth in order to have their applications accepted.

General financial services application fraud rose by 4% in 2011, with both insurance and current account fraud increasing. Insurance fraud rose by 23%, whilst 36 in every 10,000 current account applications were found to be fraudulent.

Nick Mothershaw, a director of identity & fraud at Experian, said: “It is vital that financial service firms accurately validate and verify the identities of the people they interact with and use every technique at their disposal which includes validating income claims and checking for signs of an adverse credit history.”

There was some positive news, as credit card fraud continued to fall; 12 in every 10,000 applications were fraudulent in 2011, compare to 19 in 2010. This figure stood at 45 back in 2006.

High street lenders have been increasing the number of loans and deals available to first time home buyers, but this could still fail to stimulate the market, amid fears that credit scores will need to be near perfect.

According to This Is Money, 332 deals are currently available to buyers with a 10% deposit, whereas two years ago the figure was 114, and last year it was still only 199. The average two-year fixed-rate is lower, at 5.51%, when it was 6.10% last year and 6.48% two years ago.

These figures, according to Moneyfacts, represent a saving of £89 per month on a £150,000 loan, when compared with the same borrowed amount two years ago.

HSBC has said it will lend a massive £3 billion in order to find 27,000 first-time buyers, whilst Halifax and Nationwide are also offering deals intended to spark and stimulate interest through appealing investment opportunities.

However, these deals are entirely dependent on the credit checking process, and many buyers find themselves falling at this hurdle. It can stem from simply avoiding the electoral roll, or never managing a credit card, and whilst many will feel this shouldn’t work against them as a potential buyer, they are stumbling blocks for gaining credit.

Having a proven financial history will help a lender to recognise you as a responsible borrower, capable of managing finances and paying back the owed instalments and interest payments on time and in full.

As a first time buyer you may also want to check home insurance deals, as comprehensive buildings and contents cover is popular among home owners.

A forthcoming initiative designed to benefit UK borrowers will actually result in advertised interest rates that are less indicative of actual rates, but consumers are assured that this will result in a clearer picture and a positive move towards more responsible lending.

The current rules require lenders to advertise the APR, or annual percentage rate, that would apply to 66% of UK borrowers, meaning that a third would be getting a higher rate than they expected.

The new Consumer Credit Directive will require lenders to advertise a rate that applies to only 51% of successful applicants, so very nearly half will be disappointed with their actual APR for their credit card or loan.

The Telegraph has reported that roughly 70% of loan applicants are unsuccessful, and, with the Consumer Credit Directive in force, only half of the remaining 30% of applicants will get the advertised rate. This means that a mere 15% of total loan applicants can genuinely expect the interest rate that first caught their attention.

Whilst this initially appears like bad news for borrowers, there are noteworthy positives. When a consumer is turned down for credit, there is no obligation for the lender to supply an explanation; that individual must apply for a credit report, and they may even need a report from more than one of the UK’s three credit reference agencies. On top of this, the problem may have nothing to do with their credit score. The process can be arduous, but with this new initiative lenders will be required to explain any application refusal, whilst also supplying the details of the relevant credit reference agency and how to get in touch.

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Interest rates on small personal loans have shot up by 130% since 2006, according to information from Moneysupermarket, published by the Telegraph. Although the Bank of England base rate has been taken down to 0.5%, the average interest rate on a £3,000 loan is now 14.92%; a stark contrast to 2006, when the rate for the same loan amount stood at 6.49%, whilst the base rate was 4.5-5%.

Any borrower wishing to take out a £5,000 loan will see a similar increase; the rate has leapt from 5.83% to 10.84%. Average rates on a £10,000 loan have increased from 2.73% to 8.75%, whilst rates on a £15,000 loan have also seen a big jump; 5.79% to 9.08%

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Recent figures suggest that people in the UK are being forced to turn to payday loans and credit cards such as Vanquis in an attempt to keep themselves above water. This results in crippling interest rates that families will struggle to pay back. Credit firm Provident Financial receives 2,700 applications per day for its Vanquis card, according to the Mail Online.

The Telegraph recently revealed that one in five Britons have three or more credit cards, with 17% using one of their cards at least once a day. A quarter of the UK’s 30 million credit cards saw an increase in interest rate over the last year, with credit card debts of £2,000 now taking two years to clear if you pay back £100 a month.

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This morning Reuters revealed that mortgage approvals by British banks have increased by 37.8% from January last year. Although this initially appears positive, the UK has actually seen a record low for net lending. The Daily Mail has said that lending for January is the lowest for eight and a half years, with an end to stamp duty partly responsible.

December saw lending reach £10.92 billion, with people wanting to take advantage of the stamp duty threshold staying at £175,000 until the turn of the new decade. Now it has fallen back by £50,000, and activity has inevitably lessened.

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The number of people declared insolvent in England and Wales reached a record high in the third quarter of 2009, according to figures from the Insolvency Service.

There were 35,242 personal insolvencies, a increase of 28% on the same period last year, and a 6% rise on the previous quarter.

However, businesses fared better over the period, with 4,716 company liquidations, a 4.7% quarter-on-quarter fall. However, the number of businesses going bust between July and September was still 14.6% higher than the same period a year ago.

The recession has been fuelling the rise in personal insolvencies since 2007. There are a number of reasons for this. Increased unemployment has left more people unable to pay off outstanding debts, and the onset of the credit crunch meant that many banks limited the amount of cheap credit on offer. Therefore many people were unable to borrow their way out of immediate debt problems. The slow property market has also meant that people could not sell their homes and pay off outstanding debt with the equity.

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Nearly half of all UK savings accounts pay interest rates of 0.5%, new research by financial information service Moneyfacts reveals.

Of these accounts, nearly half pay 0.1% or less, as many providers have made dramatic rate cuts in recent months. Moneyfacts reported that one in 10 savings accounts have cut their savings rates since last March, although 3.5% increased rates.

Today the Bank of England kept the official Bank rate at 5% for the eighth month in a row.

Michelle Slade of Moneyfacts suggested that interest is very low on some savings accounts because banks chose to cut their rates ahead of new rules stipulating that providers must give two months’ notice before they cut interest rates.

“It is savers, such as pensioners, who rely on the income from their savings to supplement their income who end up worse off,” she said.

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The Bank of England is expected to expand its radical programme of printing money by a further £50 billion today as it steps up the fight against the deepest economic downturn in decades.

Whilst other countries have begun to emerge from the recession, recent figures revealed a 0.4% slump in the UK economy between July and September, leading experts to predict that Mervyn King, the Bank’s Governor and the rest of the Monetary Policy Committee (MPC) will extend the total size of its quantitative easing plan to £225 billion - the size of the entire Greek economy. This is the sixth quarterly contraction in a row.

“It is a lot of money, but if it does restart the economy and gets it moving again then it’s worth it,” said George Buckley, an economist at Deutsche Bank. “It’s very difficult to say if quantitative easing is working, but it is doing something.”

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Mortgage approvals rose to their highest level since March 2008 in September, the Bank of England has reported.

The number of mortgages approved for houses purchased rose by 3,000 in September to 56,000.
Non-mortgage borrowing by individuals shrank for the third consecutive month, representing the most sustained fall since records began in 1993.

Figures released by HM Revenue & Customs show a rise in house sales to 82,000 in September, double that of January.

“Lending activity has recovered in recent months, when compared to the start of the year, as buyers and sellers tentatively return to the market,” said Adrian Coles, of the Building Societies Association (BSA).

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