Key facts
- Mortgage application fraud risk rose 9.1% in Q2 2026.
- The mortgage application fraud risk index reached a reading of 132 in Q2 2026.
- The increase in fraud risk was driven by a surge in purchase lending.
- Elevated mortgage rates contributed to the rise in fraud risk.
- High mortgage rates limited refinancing activity.
Mortgage application fraud risk saw a notable increase of 9.1% in the second quarter of 2026, as reported by Cotality. The fraud risk index climbed to a reading of 132 during this period. This upward trend is primarily linked to a surge in purchase lending, indicating more buyers entering the market. Concurrently, elevated mortgage rates have acted as a deterrent to refinancing activities, shifting the market's focus towards new home purchases. The combination of increased purchase volume and higher rates appears to be creating a more fertile ground for potential mortgage fraud. This development signals a need for heightened scrutiny and risk management within the mortgage industry to address the evolving fraud landscape.