Mortgage fraudsters are trying to cheat Northern Ireland banks out of millions of pounds, it was claimed today.

Increased criminal activity in areas like lending applications forced financiers to tighten lending conditions and increase scam prevention measures, business advisory group Deloitte said today.

Across the UK the annual cost is around £700m, according to police, with the problem exposed as property prices fall.

Phil Goodwin, an assistant director with business advisory firm Deloitte, warned of the "unseen hand" of the mortgage fraudster.

"While the housing market was rising, not only could criminals launder the proceeds of crime, but they could enjoy a low risk of detection and make a profit at the same time," he said.

"Warren Buffett, the renowned philanthropist and billionaire, once said that 'only when the tide goes out do you discover who has been swimming naked'.

"Such may be the case with the mortgage industry currently. And as the housing market has declined, banks have discovered numerous occurrences of mortgage fraud."

He linked mortgage cons trying to cheat banks out of millions to super-inflation of the housing market and exacerbating lending problems associated with the credit crunch.

Unscrupulous individuals can submit questionable mortgage applications or provide incentives to inflate the value of houses.

A whistle-blower scheme has been established by the Financial Services Authority (FSA) where people report suspicious broker activity to the authority and it shares that information with other lenders.

A spokeswoman for the Council of Mortgage Lenders said it was difficult to quantify exactly how much was down to fraud.

"The upshot of it is that we do not think that figure of £700m was substantiated, but it is of substantial concern to lenders and they are trying to find ways to combat fraud.

"It is more likely to show up in a falling housing market and at the front end there are greater temptations for fraudsters."