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New thinking and approach is needed to tackle mortgage fraud, it has been suggested by an industry expert.

The uncertainty in the present economic climate combined with people being financially over-stretched has lead to a rise in the number of mortgage frauds committed.

Paula John, editor of Your Mortgage, pointed out that people were finding it difficult to manage their financial conditions and were more likely to misrepresent as well as deceive when it came to a mortgage application.

She also noted how the lending industry had failed to do something about the rising number of frauds.

Ms John said: "Given the ongoing economic difficulties faced by everyone in the UK, and the fact that this has already over the last two years created a large rise in mortgage fraud, we are unfortunately likely to see that trend continue."

Although the mortgage lending markets have undergone serious changes in regulations and managed to survive under stringent scrutiny, it was disappointing to see deceptions still so rampant in the sector, she added.

According to recent research made public by BDO, mortgage fraud accounted for one-fifth of all reported scams in the first six months of the present financial year.

During the same time period, mortgage shams also claimed 36 per cent of the total fraud committed in the financial markets.

The report also found that the first six months of the present year saw £1.06 billion lost owing to fraudulent trading and spurious business transactions.

In 2010, the cost of the average financial scam has also increased to £6 million, in comparison to £5 million that was recorded in the month before.

Recently, the Financial Services Authority put forth a new set of regulations to ensure that mortgage applicants were thoroughly assessed to establish whether they would be able to pay back the mortgage and would not default on the scheme.