Brokers association questions validity of UBS analysis on ‘liar loans’

Investment bank UBS’s latest report saying ‘liar loans’ have reached $500 billion has met with strong opposition from a brokers body.

The Finance Brokers Association of Australia (FBAA) said in a media release that UBS was being reckless with its analysis of so-called ‘liar loans’ because it is based on implied presumptions.

UBS said that its latest survey of over 900 mortgage applications originated over the last 12 months revealed that about one third of home loans contained information that was not accurate.

Meanwhile, Australian Securities and Investments Commission chairman Greg Medcraft has said that a broken mortgage broker remuneration model and loose lending could trigger a subprime mortgage crisis.

Medcraft irresponsible lending is facilitated because of the mortgage broker remuneration model which rewards brokers for securing larger loans for their clients.

Referring to the UBS report, FBAA executive director Peter White said the figure was based on interpretation of their own research and asked the data be justified.

“I want to see their data analysis,” said White. “We need to see the questions they asked participants and we need to know how much and under what conditions they were paid.”

“UBS must prove there is no steering of answers or influences to produce outcomes which are not factual or fair or commercially sound,” he added.

White also questioned the validity of the data, saying UBS is not a lender in the home loan space, so there “needs to be clear transparency of their supposed results”.

“This is not their data and not data from a bank/lender, so the question must be asked as to the accuracy and integrity of the research, which is fundamentally divorced of market broker and lender marketplace data.”