The Intermediary – November 2025 - Flipbook - Page 39
T E C H N O L O GY
In focus
What AI means for
structural change
in the market
I
t’s easy to make grand, farreaching predictions about
artificial intelligence (AI), as
if nothing will be the same
again. The reality is likely to
be more nuanced. While the
mortgage market is about to evolve,
it’s perhaps not in the ways you think.
In fact, the fundamental structure
of the mortgage market may not
change, but the back office and room
for manoeuvre will. The relationship
between lenders and brokers is much
more likely to be affected by moves
from the regulators than AI. This was
demonstrated recently by the removal
of the advice trigger, prompting
objections that brokers won’t have
the chance to steer borrowers to the
right product, and consumers will be
worse off. That one simple change got
brokers more animated than AI ever
has, despite AI being described as the
‘fourth industrial revolution’. This
shows that the presence of regulation
and risk has as much to do with how
AI is deployed as its capabilities.
So, AI will change things, but
the same guardrails that shaped
the composition of the mortgage
industry still apply, and AI will have to
fall in line.
AI can’t pull rabbits out of hats.
It’s only as good as the data you give
it, and that’s where the lending
and homebuying sector has been
found wanting. Historically, digital
transformation has been slow, fatigue
has been rife and data sharing has
been sluggish at best. The reason for
this is that the industry’s data has been
highly fragmented.
In the real world this leads to
certain behaviours which all, without
exception, add cost. For example,
many lenders provide a mortgage and
then have limited meaningful contact
with customers aer, which means
opportunities for in-life servicing and
retention are oen missed.
The amount of time it takes to
complete a transaction has been
geing longer, not shorter, hampered
by wet signatures, restrictive data
practices and the endless rekeying
of information. Siloed data means
conveyancing takes weeks longer than
it should.The catalyst that will solve
these problems is the same one that
will set AI free to fulfil its potential.
What’s good for digital transformation
is also good for AI.
Horizontal integration
This catalyst is known as horizontal
digital integration (HDI), where
digital maturity, open networks
and shared data standards unlock
transparency and information
sharing. This includes the ability to
use verified data and permissions,
even if you didn’t obtain them.
Two key examples are verified ID
checks, and the ability to use unique
property identifiers so that all relevant
information is available to an agent
and their buyer the minute they
view a home.
An LMS pilot showed this could
drastically reduce fall-through rates,
a key pain-point for lenders, with
cancellations running at over 300,000
a year, according to TwentyCi.
HDI is a relatively new term, but
there have been a series of initiatives
recently that embody it. This is
encouraging; aer years of talking
about it, it’s finally happening.
To name a few, the Data (Use and
Access) Act received Royal Assent in
the summer, which gives consumers
the power to give permission for the
reuse of their data. Land Registry
now accepts Qualified Electronic
Signatures, which will slowly consign
wet signatures to history.
PETE GATENBY
is AI partner at Novus Strategy
The FCA has launched its Smart
Data Accelerator as well as a Live
Testing environment where the most
eager companies can start testing their
AI tools on synthetic data.
Then, there’s the homebuying and
selling reform consultation, which
proposes more upfront information,
as well as a greater commitment from
buyers at the outset.
So, HDI is the backbone of a beer
mortgage and homebuying journey
made possible by technology, and it’s
also the key to successful AI adoption.
In fact, we oen refer to it as the
‘data spine’.
Change for lenders
This sort of transformation means
lenders and brokers will be able to
do things they’ve never done before.
This won’t just apply to residential
mortgages either, so expect product
innovation across bridging and
commercial, too.
Lenders will welcome higher net
interest margins, faster drawdown
and improved underwriting efficiency.
This will lower rates, which –coupled
with faster conveyancing, easier
underwriting and more flexible
affordability criteria – could give
birth to a whole new range of
borrowing options.
Competition will increase as those
who exploit HDI best are able to
reduce rates. Reductions of 25 to 75 bps
wouldn’t surprise us, and that could
make a huge difference to borrowers.
That’s the impact of trusted and
transparent data available on day
one of a mortgage application, as the
whole ecosystem becomes greater than
the sum of its parts. ●
November 2025 | The Intermediary
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