Mortgage brokers are being spurred by the finance watchdog to use technology, including artificial intelligence (AI), to improve services to customers.

As part of its plan to build the “mortgage market of the future”, the Financial Conduct Authority (FCA) outlined four areas of focus.

One of these, which looks at innovation and disclosure, will increase the use of AI among brokers while preserving humans in the process, according to the FCA. It said it is “encouraging the use of data and technology, such as AI, to help brokers give better and faster advice while keeping a human touch”.

Another area of focus includes more flexible mortgages to help first-time buyers and those underserved.

David Geale, executive director for payments and digital finance at the FCA, said: “We have worked at pace this year to improve outcomes for customers wanting a mortgage. We’ll use insight from consumers and industry to drive further reforms and rebalance risk – helping to widen access to affordable mortgages to meet the needs of consumers today.

AI is used across the finance sector, with banks leading the way, but a balance between humans and AI is vital.

Research from Santander found that 52% of mortgage borrowers prefer a broker over AI when buying a home, while 65% said they couldn’t go through the home-buying process without the support of a broker. It found that about two-thirds (63%) of people rely on recommendations and referrals from real people, and just 5% find their broker using AI. The survey also found that 90% of customers turn to brokers for emotional support and 82% said brokers made them feel less stressed when things became complicated.

Graham Sellar, head of intermediary channels at Santander in the UK, said: “It’s clear that borrowers still value the guidance, experience and human judgement that only a broker can provide.”

He added that the technology plays a key role in improving the overall process. “AI provides support at the initial stages of deal research and exploration – but when it comes to making concrete life decisions, nothing can match the trust that is built through a broker.”

The developments could be a further example of streamlining the complicated and often frustrating process of buying a home.

Last month, the government announced that various departments are working as part of a coalition designed to transform the archaic home-buying and selling process, which costs the economy nearly £1bn a year.

The coalition, which includes the Centre for Finance, Innovation and Technology (CFIT), will explore how a digital platform could improve things. “Collapsed chains, spiralling fees and gazumping could all become things of the past,” said CFIT.

Supported by the Smart Data team at the Department for Business and Trade, the coalition is tasked with producing a roadmap for delivering a smart data service for the home-buying sector and potentially creating a prototype smart data system.

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