Would you let AI choose your mortgage?

Could buyers get better a mortgage deal from a programme run with artificial intelligence than from a human broker?

Recent research suggests homeowners wouldn’t be comfortable taking mortgage advice from AI but a New Zealand expert believes AI-driven deals may soon prove to be the better bet.

Mortgage advisers are intermediaries who research home buyers’ needs, compare mortgage offers from a variety of banks and other lenders, and process applications. Most keep in touch with clients, providing advice as homeowners’ needs evolve.

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Many in the industry argue that the human touch will always be needed, noting that not all loans are cookie-cutter deals, with good brokers taking into consideration a buyer’s whole life situation, right down to where their career might be headed.

Part of their value is that they can offer a comforting hand during what is a stressful period in a buyer’s life.

When Clive Fernandes, of National Capital, questioned mortgage, insurance and financial advisers if they thought their jobs could be done by AI, the answer from each group was that the work of the others could be, but not their own work.

Currently, AI can automate routine tasks, but there were too many issues with the technology to trust mortgage advice completely to a machine, Fernandes said.

But he gave warning that the technology was constantly improving and could soon make humans redundant.

He said AI programmes like ChatGPT could be integrated into proprietary systems provided by mortgage advice groups and banks to advisers.

In his research, Fernandes found that AI can perform tasks that typically take brokers four hours to complete in less than a second. “We have cars that drive themselves. I think we can, we can produce technology that gives mortgage advice,” Fernandes told OneRoof.

“What AI is not going to replace any time soon, but will at some stage, is the human element. The conversations etc.

“Right now, what AI can do is replace all the backend work that mortgage advisers have to do for their clients. Ultimately, that is a positive because it helps us as advisers spend more time with the client.”

AI can already take an individual’s income and expenses, compare mortgage offers, fill in forms, do calculations, and come up with suitable structures, he said.

Ben Goldsmith, founder of online home loan intermediary Tella, agreed that the background mortgage broking side of the business could be replaced by AI, but he noted that paperwork was just a small part of the service.

“Today’s clients need additional support. People may be going through separations. They might want to know: ‘Is this a good house for me to buy?’ That’s 80% of our job,” he told OneRoof.

“We could speed up the background with AI and I’m fully on board with [doing that]. AI isn’t going to say whether it’s a good area or a bad area. It may go, ‘Hey this property may be subject to weather tightness and do you know what a plaster-clad home is?’. But it’s not going to give that personal experience.”

Fernandes said where AI might step up is that it won’t make human error and could be used to double check human advice.

“That’s all something that a computer can do much faster, and way more accurately.”

For now, human advisers excel in empathetic communication, said Fernandes. “It’s really understanding what the clients want, and what the clients really want, but that is the human element that still stays with the human adviser. Potentially that could be replaced, too, in the years to come.

“ChatGPT right now has the ability to sound very, very smart and very, very human, and almost be as empathetic as a human adviser. But the issue is one of hallucinations. ChatGPT sometimes just makes things up. And in financial advice, we know that we cannot be 99% accurate, we need to be 100% accurate.”

When OneRoof asked ChatGPT if “generative AI systems provide better mortgage advice than humans?”, it gave the following answers:

- AI systems can analyse and access a vast amount of data quickly, including mortgage rates, terms, and regulations, allowing them to provide comprehensive and up-to-date information.

- AI systems are not influenced by personal biases or emotions, potentially leading to more objective advice.

- AI systems can consistently apply predefined rules and criteria to analyse mortgage options, reducing the likelihood of human error or inconsistency.

- AI systems can assist a large number of users simultaneously, making [advice] accessible to a broader audience.

However, it also came back with a list of limitations:

- AI systems may struggle to understand the unique circumstances, preferences, and goals of individual borrowers, which can be crucial in providing personalised mortgage advice.

- AI systems may struggle to analyse complex financial situations or legal considerations that require human judgement and expertise.

- AI systems may not fully grasp the broader economic or market context that could impact mortgage decisions, such as shifts in interest rates or regulatory changes.

- AI systems must comply with legal and ethical guidelines, including regulations regarding financial advice and data privacy, which may limit their scope and functionality.

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