Enhancements to current capabilities that can both find new customers and secure better outcomes for them lie at the heart of what technology can offer the mortgage industry in 2025 — and where investment may flow.
After a dry spell for venture capital in mortgage technology compared to the
The trend provides a boost for digital mortgage advocates and comes as lending volumes climb back upward following the lows of 2022 and 2023.
Growing interest in certain types of tech development from lenders has also led to fintechs entering those spaces, said Nima Ghamsari, CEO of digital origination platform Blend.
Capital funding noticeably ticked upward around the middle of 2024, he added, "and it's accelerated as there's been a real shift in the market more broadly."
Startups serving various processes in home lending,
"Everyone feels like there's a window prior to probably a multiyear upswing that is a good opportunity to focus on getting new technology in place with the express goal of just not having to step up as much as they have in past booms," said Tom George, chief investment officer at Andromeda, a unit in the Perseus Group at Constellation Software.
The ripest opportunities for growth and development will be software that manages to make data useful for mortgage bankers and servicers and tap into existing capabilities to make them work even faster.
Prioritizing the mortgage borrower
Rather than simply focusing on speed, though, what is likely to garner the most attention is innovation that places the future mortgage customer as priority No. 1, said Mike Peretz, an executive director at technology consultancy Capco which works with home finance businesses and the government-sponsored enterprises.
"This needs to be consumer or borrower centric, and I think that's where the opportunities are," he said.
Key to any efforts is the development of tools that can identify promising future candidates for affordable homeownership and then get them mortgage ready.
"What we need is to take enormous amounts of data and say, 'How do we identify those borrowers and the potential solutions?'" Peretz continued, calling it "the biggest opportunity" among fintechs currently.
At the same time, such an initiative requires a cooperative effort among lenders, GSEs and fintechs.
"This is a data-driven problem with a technological solution that, quite honestly, I feel very confident the market can get to. But they need the GSEs to put this first and foremost in their minds. Unless you have the GSEs pushing on a huge issue that is going to be relevant and profitable for fintechs and data companies, you won't have them pushing in any particular direction," Peretz said.
Lenders are already well aware of the business imperative to finding new customers in the challenging housing market of recent years and are on the search for solutions. In recent research from Arizent, parent company of National Mortgage News, mortgage industry professionals ranked the lack of qualified home buyers as their top challenge in 2025, while the lack of affordability was labeled their "biggest problem."
Artificial intelligence's growing presence
Upgrading existing processes to
"We certainly are really focused on loan profitability and on efficiency, and a lot of that has to do with AI investments," George said. The attention being showered on AI corresponds to trends occurring throughout business and commerce today based on the activity George has observed at Constellation, a software firm that acquires, manages and operates vertical market software companies in financial industries.
Mortgage-related tech firms already under Constellation ownership include Dark Matter Technologies and Optimal Blue, both former units of Black Knight that were divested in its merger with Intercontinental Exchange. In 2024, Constellation's Andromeda division became the first corporate partner of The Mortgage Collaborative's emerging technology fund, which aims to invest in fintechs focused on improving home finance and servicing processes.
"When we look at our partner network — whether that's formal partners or more broadly at the companies that we keep track of because we're a serial acquirer — we certainly see lots of folks that are making progress with AI for loan origination and workflow and document classification and data extraction," George continued. "We see lots of folks out there that are making hay and gaining customers."
While AI continues to be a headline grabber, its development is rapidly accelerating as it proves it can match much of the hype, according to Ghamsari.
"The things that we do a lot in this industry are things that AI is really, really good at," he said. "This is actually a huge issue of any frontier technology — some of them never make the leap from hypothetical/theoretical to practical."
While the theoretical benefits of AI piqued mortgage professionals initially, many weren't sure how helpful they might turn out to be in their own operations.
"It turns out now that AI is very practically applicable to many industries, and especially industries where people are doing a lot of monotonous, repetitive, manual tasks and around documents," Ghamsari said.
The costs of using AI for such tasks is only going to get cheaper, while its reliability should get better, he added.
"The same AI that we were trying to use a year ago to do some of these tasks — it was not very good. And then this year, it was," he said.
Any inroads to be made in financial technology still need to hold benefit to the end user above all else, said Figure Technologies CEO Michael Tannenbaum. The effectiveness of a technology might be measured by how seamless it will appear to them.
"I think if you try to make it something that the borrower or the customer or the investor has to interact with, then you're doing it a disservice. When you use software, it's hosted through the cloud, but you're not really aware of it," he said.
The Trump effect
A new year also
"I think now you'll see good inflow of money into financial tech, and there's a lot to be done in that world. Not necessarily in lending, but in the user experience on both the customer and the business side," Peretz said. "This will be a very good time for significant changes and significant improvements in financial services."
But an administration set on changing rules imposed during President Biden's term could lead fintechs to think more about the possibilities the lending sector might offer.
"The election is probably making some people more excited about mortgage technology in the sense that people are seeing potentially reduced regulatory requirements on the horizon," Tannenbaum said.
"However, you could argue that those more complicated regulatory requirements were actually the reason why fintechs were able to gain share," he added.
Software and services focused on borrowers and assisting them with the challenges in front of them, though, will still stand out for development, Peretz said. Some mortgage servicers have taken note, already using
"The ability of the banks to employ directed resources and directed tech to look at who is the most vulnerable in the market and how to help those people — I think that is coming," Peretz said.
The pace of any technology investment remains difficult to predict with multiple factors from policy to mortgage rates possibly throwing a wrench into plans, but vectors are pointing in the right direction, George said. Although some capital providers are making moves already, others will come in on a lag until business volume jumps significantly.
"My expectation is it'll be at that point where you'll see additional investments in tech companies that are already in the space and some new startups coming online," he said.
The businesses holding the purse strings, George added, have a habit of "waiting to make sure it's real before they are willing to go in and put the thesis together to invest."
