The mortgage industry is on the cusp of a transformation driven by artificial intelligence, promising faster approvals and lower costs. But as lenders race to automate, borrowers must consider the value of human interaction in one of life's largest financial decisions.
The Speed Advantage
How much extra would you pay for a mortgage approval in seconds rather than days? This question will soon face hundreds of thousands of Canadians. AI now enables lenders to perform tasks that were once time-consuming in minutes. For instance, TD Bank reports that AI can classify client documents, extract key information, calculate income, validate figures against policy requirements, perform consent checks, and generate summaries for underwriters in just three minutes—a process that previously took 15 hours. The bank claims this automation also improves accuracy and fraud detection compared to human staff.
Widespread Adoption
TD is not alone. Every major lender is investing in AI to streamline mortgage processing. Within a few years, AI may handle nearly every step of the process, with humans primarily overseeing operations. However, the sales function will likely remain human-dominated for longer.
Impact on Borrowers
This shift will affect borrowers in several ways. Faster approvals reduce friction, encouraging more applications. Since multiple credit inquiries from mortgage lenders do not hurt credit scores (according to Equifax), borrowers may shop around more aggressively. A firm approval in hand gives consumers leverage to negotiate rates, potentially leading to more rate chasing. Less tech-savvy lenders running rate specials may face backlogs, as borrowers become less tolerant of slow service. With interest rates still the primary reason for switching lenders, AI could increase application cancellation rates as speed becomes a commodity.
Future Developments
Unconditional approvals will become even quicker once lenders can pull data from borrowers' bank accounts via open banking, draw income data from direct payroll connections, and get digital income verification from the Canada Revenue Agency. These advancements will make speed a standard feature rather than a competitive advantage.
Benefits for Non-Standard Borrowers
Borrowers with non-standard applications—such as self-employed, gig, or commission workers, or new-to-Canada individuals with thin credit files—may benefit if AI models incorporate alternative data more effectively. This could lead to more approvals for edge cases that traditional underwriting might reject.
The Human Element
Despite the efficiencies, the removal of human interaction raises concerns. The mortgage process involves significant emotional and financial stakes. Having a human advisor can provide reassurance, explain complex terms, and offer personalized advice. As AI takes over, borrowers may lose that guidance. The question remains: is the trade-off worth it?
