Gehrke says more than 75% of consumers also want to know every time AI is used in their transaction
Adoption of artificial intelligence (AI) technology has been occurring at a breakneck pace, with everyone at all levels of the transaction finding ways to leverage new technology.
While lenders, brokers, and servicers sort through what AI tech adoption is best for their businesses, homebuyers and homeowners are already using what’s available to them to drive decision-making.
New JD Power research on consumer AI usage in financial decisions is showing adoption numbers that are moving faster than the mortgage industry anticipated. In the home equity market, adoption of AI as a research and decision-making tool has reached nearly half of customers.
Bruce Gehrke (pictured top), senior director of wealth and lending intelligence at JD Power, said the home equity numbers in particular stood out.
"In just home equity — HELOC — the number is over 40% of current borrowers who opened a new HELOC within the last three months have used artificial intelligence to drive that decision," Gehrke told Mortgage Professional America. "That's like a zero-to-60 kind of thing. Go back maybe a year and a half, and that didn't exist.
“So you're a HELOC lender, this is something you have to be thinking about. And I think it's the same thing that you're going to see this on the mortgage side as well, no question."
What is fueling adoption
The speed of the shift is what Gehrke said makes it notable. The fact that more than 4 in 10 are using AI for HELOC decision-making suggests the adoption of new technologies is happening faster than in the past.
The trust element is the variable that will determine how fast AI moves through purchase and refinance mortgages, Gehrke said. When consumers trust an AI model for a high-stakes financial decision, behavior changes, and the HELOC data suggests that threshold has already been crossed for a meaningful share of home equity borrowers.
The easier the process gets, the more Gehrke believes adoption will follow.
"Convenience is what really, really drives adoption," he said. "People will follow the easiest path that they trust to get something done. We've seen it before in other areas. We've seen it in other financial services. And I think that's where really the potential for both lending and for real estate is at this point."
Customers want transparency
The growth in AI usage also surfaces a consumer expectation that brokers and lenders will be transparent about the AI they’re using in a mortgage transaction.
"Over 75% want to know every time that you're using it," he said. "So it's important that you know."
The disclosure question becomes more complex as AI moves from consumer-facing research tools into lender-facing interaction models, such as AI agents handling service calls, and Gehrke said consumers have already formed strong opinions about calls using interactive voice response (IVR) technology.
"You know how consumers react to IVRs and the endless menus and things of that nature, the frustration level that that can drive," he said. "And then when I actually start talking to somebody, I had it basically up to my eyeballs, and I'm like, ‘Enough!’ And now I'm having a more challenging conversation just because I'm frustrated, not because of the problem, but it's because of the process it took me to get there.
“And if AI can improve that, that's a benefit. But then if it's not working effectively, then we just don't know how consumers are going to respond."
The regulatory picture adds another layer of uncertainty, Gehrke said. The current environment gives lenders freedom to experiment, but that window may not stay open indefinitely.
"With the way regulators tend to come in after the fact, you can have something all set up and then all of a sudden they'll decide that's not okay," he said.
That uncertainty has not slowed industry investment, Gehrke said, but it is shaping how lenders are thinking about where to place their bets.
"What tends to happen in the industry is everybody invests in the technology because it's cool and it looks great,” he said. “Anything that cuts telephone calls is a way to reduce costs. But the question then becomes a larger decision balancing driving trust or pure financial efficiency. And there's a mix there. But ultimately, what works for the consumer makes the decision for the industry."
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