AI is now a key driver of transformation in financial services, reshaping the foundations of mortgage lending. More than 85% of UK lenders are now deploying AI tools to streamline processes and improve decision-making, according to AllAboutAI.com. For a sector that has long been criticized for rigid risk models and slow processes, this is transformative. However, in the alternative lending sector, which has grown to represent 41% of the UK market by offering flexibility and a relationship-based approach, a key question arises: can algorithms replace the judgment and trust of a human guarantor?
Global momentum is now adding weight to the discussion. Huge infusions of private capital from the Gulf and Southeast Asia, along with new technology alliances between the UK and the US, show that investment in AI and quantum technologies is accelerating, not slowing. Against this backdrop, the UK’s AI ecosystem is expanding rapidly, and its impact is already reshaping property finance workflows.
Morgan Stanley’s 2025 survey predicts that AI can automate up to 37% of tasks in commercial real estate, including appraisal, underwriting, fraud detection, and agreement tracking. The efficiency gains are significant, but risks remain. A 2024 Bank of England study found that while three-quarters of financial firms in the UK are already using AI, concerns about data bias, privacy and reliance on third-party vendors remain. Meanwhile, fears of job displacement and the potential for “invisible” deal quality, where decisions are made through opaque models, are weighing heavily on the sector.
However, the FCA has taken a supportive stance, encouraging innovation where it can enhance compliance and protect markets. From a fraud perspective, the benefits are significant: AI can flag suspicious activity, enhance anti-money laundering (AML) checks, and ensure KYC requirements are consistently met. When used responsibly, AI can uncover risks that even experienced underwriters may overlook. But regulators are clear: transparency and accountability are non-negotiable. Lenders must ensure that AI enhances decision-making without undermining fairness, governance or customer experience.
For lenders, the promise of AI is to increase productivity without sacrificing accuracy, enabling them to meet growing demand while maintaining compliance. However, the contrast between traditional lending and alternative lending is stark. In high-volume banks, the “tick” approach pairs well with automation. In contrast, alternative lending thrives under complex scenarios such as risk planning, change of use, or complex financing structures. These situations require problem solving, business acumen and, most importantly, a real “feel” for the counterparty.
Algorithms can crunch numbers quickly, but they can’t replicate the value of reputation, industry expertise, or trust built across the table. In practice, AI can speed up due diligence: detect red flags faster, validate data, and support risk assessment, but the “human layer” remains vital to deal creation, negotiation, and long-term partnerships.
In mortgage lending, the deciding factor is often not just data, but who you know and who trusts you. No one lends large capital to an unfamiliar party without the assurance of a reliable relationship. AI can sharpen the process, but it cannot replace the foundation of trust and communication on which every successful deal is built.
Ultimately, the future of UK mortgage lending will not be determined by technology alone. AI promises unprecedented efficiency: automating assessments, enhancing fraud detection, and accelerating the underwriting process, but algorithms are unable to replicate the nuance between trust, networks, and reputation.
For alternative lenders in particular, where transactions are rarely straightforward, it is the “human layer” of problem solving, business instinct, and relationship building that determines the success of a deal.
The winning formula will be AI-driven speed combined with human-centric judgment. For lenders and investors alike, the opportunity lies in deploying AI to unlock scale and accuracy, while maintaining the personalized trust that underpins every successful deal. In an increasingly automated market, the difference will not be the technology itself, but the people who know how to use it, without losing sight of the relationships that matter most.
Daniel Austin, CEO and Co-Founder of ASK Partners
“AI Meets Instinct: Why the Human Connection Still Defines Mortgage Lending” Originally created and published by International retail bankerwhich is a trademark of GlobalData.
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