U.K. Mortgage Seekers Exploit Loophole to Avoid Credit Check

Rules requiring U.K. homebuyers to prove they can afford their mortgages after interest rates rise have prompted a jump in fraudulent home-loan applications, property appraiser e.surv said.

The unit of LSL Property Services Plc said borrowers have been trying to exploit a loophole that exempts buy-to-let mortgages from affordability checks that regulators introduced to prevent a repeat of the credit crunch. The rules, part of the London-based Financial Conduct Authority’s Mortgage Market Review, took effect in April. A month later home prices surpassed their 2007 peak, according to Nationwide Building Society.