Sherlok lands $3.4 million for automatic AI mortgage refinancing platform

Fintech startup Sherlok has just secured $3.4 million in funding for its AI mortgage assessment program.

The round was led by Rampersand, with participation from Investible, Paloma, and Common Sense Ventures.

Launched in Adelaide in 2019, Sherlok has an uptick in usage of 700%, and back in 2022 it partnered with mortgage aggregator, Australian Finance Group, giving it access to 3,700 brokers. At the present time, it is across roughly $70 billion worth of home loans for Australian brokers.

Sherlok offers brokers a SaaS subscription service that allows mortgage owners refinancing options with their current lender.

Before now this has been a manual process, but Sherlok is expanding to a one-click solution with the use of AI.

According to the company, the focus is on helping brokers retain their existing clients through single-click repricing and refinancing.

Its engine does this by assessing data to ascertain whether the mortgage owner could get a cheaper interest rate. Part of this information is drawn from open banking data.

Sherlok’s AI platform is tapping into open banking data

Back in January, Sherlok became Australia’s first platform to access open banking data under the new Consumer Data Right (CDR) principal access model. This allows unrestricted data recipients to be a principal for organisations wanting to access that data.

Fintech Adatree is one of these recipients that allows access to the CDR ecosystem, which Sherlok has partnered with so its AI model can access open banking data and credit decisions in real-time.

It also allows brokers to predict customer churn when interest rates get too high.

“We’re presented with a very unique inflection point in the home loan industry, where data accessibility via open banking meets technological capability and extreme consumer demand for fast refinancing”, Sherlok founder and CEO Adam Grocke, said.

Keeping clients as interest rates rise and mortgage holders scramble to refinance

The cash injection into Sherlok comes at a pertinent time, as interest rates remain high. There’s also those feeling extra pressure, with record numbers of fixed-rate mortgages expiring in May.

This meant that a chunk of Australian homeowners went from cheap interest rates of around 2% to 6% or higher.

According to data from Mozo, the current average variable home loan rate for owner-occupiers for June 2023 is 6.32%. And the average two-year fixed rate is 5.84%.

Unsurprisingly, mortgage holders are being encouraged more than ever by finance experts to explore their refinancing options for a better deal.

This is where Sherlok is stepping in to assist brokers in swiftly offering those deals themselves before their clients walk. According to Sherlok, this addition to its product suite will reduce wait times for borrowers from 30 days to instant approval.

“These homeowners are more under pressure than ever in the current market and their brokers are looking for better ways to serve them, retain them, and refinance them,” Grocke said.