Why mortgages need humans – Davies

At one end sits a vision of AI as a powerful assistant, helping lenders, brokers and consumers navigate an increasingly complex market more quickly and efficiently.

At the other end lies a more dramatic scenario in which algorithms ultimately replace advisers altogether, with consumers obtaining mortgages through fully automated digital journeys.

The reality is likely to be considerably less revolutionary and far more practical. 

The fact that almost 90% of mortgages are arranged by intermediaries is no accident of history, but rather a deliberate recognition that qualified, regulated, empathetic human advice produces better outcomes for borrowers than any unmediated process. 

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AI has its place in the advice process 

However, we must also acknowledge the considerable opportunities that AI offers. 

The first generation of mortgage AI is already here: technology can analyse documents, extract information from payslips and bank statements and help progress applications more efficiently. It can reduce administration, improve consistency and allow advisers to spend more time focusing on customers rather than paperwork. 

The second stage is already emerging. AI can prompt further questions, identify missing information, flag up risks and support advisers in delivering better results. Used responsibly, these tools have the potential to improve both efficiency and consumer understanding. 

The debate becomes more complicated when it comes to the theory that AI could eventually replace human mortgage advice altogether. That assumption overlooks a core fact: finding the most suitable mortgage for a borrower is not simply a product comparison exercise. 

More than picking a mortgage rate

Every lender has its own risk appetite, underwriting approach and interpretation of policy. While much information is publicly available, the reality is that criteria documents cannot cover every possible scenario. 

Advisers spend years building expertise in understanding how lenders approach real-life cases, particularly those that sit outside the mainstream. Knowing which lender is most likely to accept a particular application can save borrowers considerable time, stress and disappointment.

It is a form of professional judgement that goes well beyond comparing interest rates and product features. And if an adviser encounters a case with circumstances not seen before, that’s where experience and ability to think laterally and find a new solution really come to the fore. 

What’s more, consumers often do not know what they do not know. A first-time buyer may believe their only challenge is finding a competitive interest rate, when the real issue is understanding affordability, deposit options, family support arrangements, future life changes or the implications of taking a longer mortgage term, for example. A self-employed borrower may not realise that different lenders assess income in completely different ways. 

A customer approaching retirement may be unaware of the full range of later life borrowing options available to them. 

All of these situations and many more require an informed conversation. They call for judgement, experience and curiosity. They need somebody to identify issues the customer has not thought to raise, someone to challenge assumptions, explain trade-offs and help borrowers understand risks as well as opportunities. Crucially, they also require empathy. 

Supporting a major life decision or change

Mortgage advisers routinely support people through some of the most significant events of their lives: buying a first home, starting a family, relationship breakdown, illness, bereavement, retirement and financial difficulty. 

These are very real human experiences, not simply financial transactions. 

We are also seeing growing numbers of borrowers with multiple income streams, portfolio careers, self-employment income, family assistance arrangements and later life borrowing needs. These are precisely the types of cases where human expertise adds most value. 

The Financial Conduct Authority’s (FCA’s) Consumer Duty rightly places considerable emphasis on delivering good customer outcomes, identifying vulnerability and ensuring consumers genuinely understand the decisions they are making. Those obligations become even more important as technology advances. 

There is also an assumption in some discussions that consumers actively want fully automated advice. Many undoubtedly value digital tools and self-service options, but mortgage borrowers reflect the wider population. They vary enormously in age, confidence, financial knowledge and personal circumstances.

Some will embrace AI-driven processes, while others will find them alienating. 

Knowing where AI fits in 

Of course, none of this means the industry should resist innovation. Lenders are investing heavily in technology because they want to improve the customer experience, speed up transactions and reduce unnecessary friction throughout the home buying process. 

But there is a significant difference between using AI to support advice and using AI to replace it. 

The future is unlikely to involve lenders building technological platforms designed to eliminate advisers, as some commentators have suggested. A far more likely scenario is one in which technology handles routine tasks, analyses information quickly and provides valuable insights, while qualified advisers focus on what humans do best: understanding customers, applying judgement and helping people make informed decisions. 

The mortgage market has always evolved, adapting to new regulations, new technologies and changing customer expectations. AI will undoubtedly become part of that evolution.

But its greatest value is likely to come not from replacing existing expertise, but from enhancing it, enabling lenders and advisers to support borrowers more effectively throughout their homeownership journey.