On 13 February 2025, the Financial Conduct Authority (FCA) published, as part of its artificial intelligence (AI) research series, a research note: An empirical analysis of pricing differences by demographic characteristics in the UK mortgage market.

The research note seeks to understand whether there are differences in the prices paid for mortgage products by a series of demographic characteristics.

The conclusion set out in the research note is that, after adjusting for mortgage type and controlling for risk factors, there appears to be no difference in mortgage pricing across the 4 demographics analysed: ethnicity, sex, sexual orientation, and having a health condition (as a characteristic of vulnerability). Instead, the research found that groups appear to have different types of mortgage products, although it was unclear whether that difference was driven by consumer choice or due to the types of mortgages those consumers were able to access.

However, the FCA notes that from the research, whilst it observes that there is no evidence of a lack of direct pricing fairness (through differences in pricing by demographic characteristics alone), it cannot conclude that there are not issues with ‘demand fairness’ via the availability of products to different groups, as there are other potential drivers of differential outcomes such as the impact of society on individuals’ financial conditions at the time of taking out a mortgage. 

The FCA has been carrying out research in the area of AI bias to help deepen its understanding of AI and its potential impact on financial services, and to spark discussion on these issues.