Market Watch: Does AI know your name? – Mortgage Strategy

Welcome back to Market Watch. But maybe not for much longer.

I have been reading the latest discussions about artificial intelligence (or ‘super intelligence’, as Trump insists on calling it), and whether AI will eventually replace mortgage brokers, writers, marketers and, most concerningly of all, opinionated mortgage columnists.

There seemed only one sensible thing to do. I asked ChatGPT to help me write this column.

If what follows is unusually coherent, insightful and beautifully constructed, I shall naturally take full credit. If it is rubbish, you know exactly who to blame. Welcome to the future.

It is no longer simply a case of: how do I rank top on Google?

While we have all been busy wondering whether machines are coming for our jobs, the bond markets have been coming for our mortgage rates. August CPI inflation rose to 3.1%, from 2.9% in July, with transport, particularly motor fuels, providing the largest upward contribution. The Bank of England (BoE) expects inflation to rise further over the coming quarters as higher energy costs continue to feed through. That has rather changed the mood music.

For much of the past couple of years, every mortgage conversation eventually came back to the same question: when will rates come down? Now we have the less comfortable question: could they go up again?

The Monetary Policy Committee kept Bank rate at 3.75% in September, but the interesting bit was the vote. Six members voted to hold, while three wanted an immediate rise to 4%.

The BoE says the risks to inflation are tilted further to the upside, largely because of energy prices and geopolitical uncertainty. At the same time, economic activity has been slightly stronger than expected, although the labour market remains soft. An awkward mixture.

Does the AI understand who we are, what we are good at, whether we are trustworthy and whether we are relevant to a person’s problem?

The market predicts three to four increases in the next 12 months. I still think one at most.

Wholesale market volatility has inevitably found its way into mortgage pricing. As you know, this matters because every move in rate affects not just monthly payments and affordability calculations but, more importantly, confidence.

The latest BoE numbers rather ram the point home. Mortgage approvals for house purchase dropped to 54,918 in August, down from 55,928 in July and the lowest level since December 2023. At the same time, the effective rate actually being paid on newly drawn mortgages increased to 4.60%.

There was another, rather eye-catching number buried in the release. Net unsecured consumer borrowing jumped by £2.46bn in August, the biggest monthly increase since the series began in 1993, while annual unsecured credit growth accelerated sharply.

Now, there are different ways to interpret that. It may indicate consumers feeling confident enough to borrow and spend, or it may suggest households leaning on credit as everyday costs bite. What it does tell us is that household finances deserve careful watching.

The Bank of England expects inflation to rise further over the coming quarters. That has rather changed the mood music

The housing market, meanwhile, continues one of its favourite party tricks: producing three different statistics that appear to tell three different stories.

Rightmove recorded a 0.7% monthly rise in asking prices, the first increase since May and slightly stronger than the usual September bounce. Yet asking prices remain 0.8% below where they were a year ago.

The Lloyds House Price Index showed prices down 0.2% in August and 0.4% annually, the first annual fall in that index since November 2023. Meanwhile, the official UK House Price Index, which turns up slightly later to the party, showed average UK prices 1.4% higher annually in July, at £273,000.

This is why I always get twitchy when somebody confidently announces what ‘the UK housing market’ is doing. There is no single housing market. There are thousands of them, divided by geography, property type, price point, buyer profile, school catchment and whether the vendor has decided their three-bedroom semi is somehow immune to the laws of economics.

The better description right now is ‘subdued, fragmented and price sensitive’, rather than ‘collapsing’.

Whatever comes out of the red box this month, the reaction of bond markets could be as important for borrowers as the policy announcements. Against that background, the government has already unveiled Your First Home, a new equity loan scheme for England that will be formally confirmed in the Budget. Anything that helps aspiring first-time buyers tackle the deposit barrier deserves a fair hearing, and a 2.5% deposit will turn heads. But we should learn from Help to Buy.

While we have all been busy wondering whether machines are coming for our jobs, the bond markets have been coming for our mortgage rates

Supporting demand and increasing supply must walk together. Helping thousands more people reach the front door is wonderful, but it works much better if somebody is simultaneously building more front doors.

Done properly, it may unlock homeownership for people who can demonstrably afford monthly payments but cannot get over the deposit hurdle, while giving developers confidence to build. If supply fails to respond, however, we risk stimulating one side of the equation without fixing the other.

What of the money markets? Since last time, three-month Sonia has stayed steadfast at 3.75% while swaps have continued their inexorable rise.

2-year money is up 0.28% at 4.61%

3-year money is up 0.28% at 4.66%

5-year money is up 0.27% at 4.70%

10-year money is up 0.21% at 4.87%

Back to the AI discussion. The debate in our industry has moved extraordinarily quickly from ‘What exactly is AI?’ to ‘Will AI take my job?’ The FCA’s Mills Review gives us a glimpse of what may be coming.

I always get twitchy when somebody confidently announces what ‘the UK housing market’ is doing. There is no single housing market

Its consumer research found that around 20% of adults could be willing to use agentic AI capable of acting autonomously within predetermined goals. Not simply asking an AI chatbot: what is a fixed-rate mortgage? Actually allowing the tech to do things on their behalf. That is a very different proposition.

The FCA talks openly about a future where AI agents could compare financial products, recommend actions, switch providers and potentially act as a form of personal financial proxy. It has also raised the fascinating possibility that firms may eventually find themselves competing not merely for the consumer’s attention but for the attention of the AI agent acting for that consumer. That should make us all sit up.

Because I wonder if one of the biggest immediate changes AI brings to our sector is not actually replacing advisers. It is replacing the way people find advisers.

It is no longer simply: how do I rank number one on Google? It becomes: does the AI understand who we are, what we are good at, whether we are trustworthy and whether we are relevant to a person’s problem?

The better description of the housing market right now is ‘subdued, fragmented and price sensitive’, rather than ‘collapsing’

That means genuine expertise, authoritative content, clear evidence of experience, useful information, trusted external references, reviews and a strong digital reputation become even more important.

And if AI increasingly sits between consumer and business, being known by the machines may become almost as important as being known by the public.

Andrew Montlake is a director at Coreco

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This article featured in the October 2026 edition of Mortgage Strategy.

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