Gen Z and Millennials turn to AI for refinancing mortgage advice

Millions of Australians are experimenting with artificial intelligence to get ahead in the mortgage market, as rising interest rates drive borrowers to seek smarter ways to manage their debt.

New research from Finder reveals 16 percent of mortgage holders have used AI platforms like ChatGPT or Copilot to research or switch their home loan in the past year.

The trend is strongest among younger homeowners, with 28 percent of Gen Z and 20 percent of millennials tapping into generative AI tools for home loan advice, compared to just 8 percent of Gen X.

With the average Australian home loan sitting at $678,010, the pressure is mounting.

Finder's survey found one in three borrowers (33 percent) are in mortgage stress, while ABS figures show a record-breaking 112,841 refinances were processed in the June quarter.

A new front in mortgage shopping

Graham Cooke, Head of consumer research at Finder, said the rise of AI in mortgage searches highlights the growing desperation of borrowers.

"It shows that when people feel squeezed, they get clever about finding a solution," Cooke said.

"AI can be a smart way to streamline research and identify a good deal, but Finder can show you the best loans for your personal situation. People are having to be more creative than ever to stay on top of their repayments and keep the bank off their back."

Cooke stressed that while AI is a useful starting point, it's no substitute for accurate, up-to-date market data.

"Generally, it's great to use AI as an initial tool to do some research, but as AI platforms tend to hallucinate, it's a better idea to go to a comparison site to compare home loans and get guaranteed accurate data."

The topline tip? If you want the current accurate rates without hallucination, speak directly to a broker or use a comparison site like Finder.

Cooke adds: "Many, but not all AI models can search the internet for current rates, but often the fee models have reduced functionality."

"Finder is currently undertaking research on various AI models and how accurately they dispense product data, including how accurately they follow rate changes and product data changes. So we may have more to say on that in a few weeks."

Risks of relying on AI

Finder is currently investigating how well different AI models track financial data such as interest rate changes.

While some AI systems can scan the web for current rates, Cooke noted that free versions often have reduced capabilities.

"While AI can be great for budgeting advice, it can be very inaccurate when it comes to getting information about the best products available right now. At the moment, AI is not a silver bullet for home loan research."

The rise of the AI broker?

Experts are questioning whether AI will evolve into a fully fledged "AI broker" model, finding, valuing, and even pre-qualifying borrowers for loans.

Cooke said this future is inevitable, but not guaranteed.

"The emergence of AI in everything when it comes to personal finance is inevitable. From AI advisors and AI brokers, people are already using AI to automatically purchase and sell stock and cryptocurrency.

"How useful these models actually are, however, will determine their impact. For now, most people still prefer a human when it comes to financial advice."