Homeowners and potential buyers across the UK are finding themselves increasingly targeted by opportunistic scammers offering deceitfully low mortgage rates. According to the latest data from Action Fraud, the national fraud reporting centre, incidents of mortgage and lender loan fraud have surged by 33% over the past three financial years. This rise coincides with climbing interest rates that have squeezed household budgets.

During the financial year 2021/22, Action Fraud recorded 341 cases of mortgage-related fraud, a significant increase from 257 cases in 2020/21. The backdrop of this increase is the transition from the ultra-low mortgage rates seen during 2020/21—some dipping below 1%—to current rates which hover above 4%, with many even higher. This sharp increase makes the scammer’s offers of “too good to be true” rates even more tempting to financially strained homeowners.

How the Scams Work

Scammers are exploiting this desperation through various deceitful tactics:

• Bogus Brokers: Fraudulent brokers promise unusually low rates, such as 2%, asking for a substantial upfront fee to secure these rates. Unfortunately, after receiving the payment, these brokers disappear, or fail to secure the promised rates.
• Reverse Mortgage Traps: Scammers also lure victims with offers for equity release mortgages, known as reverse mortgages in the UK, with a falsely urgent “24-hour expiration” to rush the decision-making process, coupled with an upfront fee demand.

These scam attempts are often delivered through sophisticated-looking emails from bizarre and nonsensical email addresses, despite their professional appearance.

Protect Yourself from Mortgage Fraud

Industry experts are voicing concerns and providing advice on how to navigate these troubling waters:

• David Hollingworth, L&C Mortgages: He warns that with rising mortgage rates, scams are likely to increase. Hollingworth advises extreme caution with deals that seem too good to be true and recommends thorough discussions with advisers about personal needs and circumstances before considering any mortgage products.
• Jane King, Ash Ridge: King stresses the importance of dealing with advisers in professional settings, such as their office or your home, and avoiding informal environments like pubs. She also emphasises the necessity of verifying that the adviser’s firm is registered with the Financial Conduct Authority (FCA) and insists on seeing a business card with firm details.

King also mentions that reputable, independent advisers should have access to rates from all lenders, so exclusive, special deals should raise red flags.

Recognising and Reporting Fraud

Action Fraud outlines specific features that may indicate a fraudulent mortgage offer:

• Offers of low interest rates with overly appealing visuals.
• Professional-looking emails from generic addresses.
• Promises of significant savings in catchy emails sent from convoluted email domains.
• Invitations to apply for reverse mortgages with urgent, 24-hour deadlines to provoke hasty decisions.

Steps to Take if You Suspect Fraud

If you encounter a suspicious mortgage offer:

• Forward the email to the official reporting address: report@phishing.gov.uk.
• Contact the purported organisation directly using contact details from their official website, not those provided in the suspicious message.
• Refrain from providing personal information over email, as legitimate banks and financial institutions will not request sensitive details in this manner.
• Consult with trusted family members or seek independent professional advice before making significant financial commitments.