Sanity over savings: Two thirds of buyers are struck with anxiety fighting the challenges of buying their first home

17 September 2019

  • Two thirds (64%) have anxiety over the challenges they face when purchasing their first house.
  • Half (47%) of households earning more than £80,000 are struggling to save for a deposit.
  • Singletons are three times (21%) more likely to pull out of the market than those buying a home with another person (6%) due to stress.
  • The average person spends £2,892 year on travelling and tech.
  • Nearly half (46%) of buyers are considering moving home to save for a deposit.
  • As many people would talk to their parents (55%) as they would seek professional advice from a bank (57%) about buying a house.

This year, reports revealed that first-time buyers (FTBs) account for more than half (51%) of the nation’s buying market for the first time since 1995.

With the average deposit for a first-time home now sitting at £33,000, rising to a monumental £110,000 in London (2018), today new research has revealed that mortgages have as much impact mentally as they do financially on first-time buyers.

According to a survey of 2,000 first-time buyers currently in the market, commissioned by online bank Atom bank, two thirds (64%) of the nation’s FTBs have admitted to feeling anxiety when tackling the challenges of the mortgage process and purchasing their first home.

3 in 5 (58%) admit that a key contributing factor to their high stress levels is saving for a large enough deposit. The stress is not limited to those on lower income as almost half (47%) of households earning more than £80,000 a year have said they’re struggling to save for a deposit. This is in spite of the fact they’re earning nearly three times the national average wage (£29,009).

A lack of education around mortgages is playing a huge part in buyers’ anxiety. Although a quarter (26%) of buyers with anxiety admit they’re satisfied with their knowledge on mortgages, nearly twice as many (48%) of those with feelings of anxiety are unsatisfied with their knowledge on mortgages.

The process has become too much for some, as over a third (37%) of buyers recently considering purchasing a new property have pulled out due to being overwhelmed by the stress of it all.

Mortgage complexity and mental health

The research reveals the complexity of the current mortgage process is causing first-time buyers to doubt whether mortgage companies actually understand the challenges modern buyers face.

More than 7 in 10 people (72%) who are anxious about the challenges of purchasing a home don’t think that mortgage companies fully comprehend the challenges buyers face.

The consensus is heightened by the fact that more than three quarters (78%) of the nation believe the mortgage process is too complex and needs to be more consumer-friendly. The research further reveals that the process confuses buyers – from builders to barristers – with more than a third (37%) of buyers with a postgraduate degree feeling dissatisfied with the mortgage process. With 7 in 10 (70%) of the Brits looking to move in to their new home this year still feeling anxious about the prospect, the mortgage process proves to be daunting from start to finish.

The challenge is too much for one person’s shoulders, as a fifth (21%) of buyers going through the mortgage process by themselves have had to pull out due to stress, compared to only 6% of those going through it with at least one other person. This still takes its toll on those in a relationship, as two thirds (65%) have claimed that although they haven’t pulled out of the market, the process has given them anxiety.

Spend or save: Where does all the money go

The turn of the 21st century has brought a new challenge for millennials trying to save for a deposit. The average person spends £1,740 a year on amenities such as streaming and on-demand services, phone bills and electronic devices. Modern technology has also made travelling much more accessible, with the average person spending £1,152 a year on trips. Combining the two means the average person spends £2,892 a year on both exploring and everyday tech, which is more than 1% of the average UK house price (£230,292).

In efforts to balance the books, nearly half (46%) of buyers would be willing to move back home with their parents to save money. Former university students are a high proportion of those not willing to move home (53%), despite 3 in 5 (60%) claiming that saving for a deposit is the biggest obstacle, as well as the average university debt being £50,800.

Those living by themselves tend to get used to the quiet, as 7 in 10 (69%) would not be willing to move back home, compared to half (52%) of people who live with at least one other person. Higher earners are more likely to move back home, as nearly half (47%) of those earning over £34,000 would move home to save, compared to 2 in 5 (39%) people earning under £34,000.

Moving home is just the start for some, as 2 in 5 (38%) of buyers admit that their only way of saving a large enough deposit is through financial support from either a family member or partner. The reliance on family help grows with the buyer’s age; Generation X are twice (26%) as likely as millennials (13%) to ask for financial help when they’re trying to buy.

Despite a double income, two thirds (65%) of those in a relationship say that the biggest obstacle they face is saving for a deposit, compared to half (50%) of singletons. Adding to the family stretches finances further, as 2 in 5 (38%) of buyers with children rely on financial help from their family or partner, compared to 1 in 5 (22%) of those without children.

Stick or twist: Flying the nest

Over a third (37%) of buyers chose to buy in the same area they grew up, with a quarter (25%) stating that they look to buy somewhere that’s close to their friends. Travelling may give millennials the confidence to buy a new home in the unknown, as a quarter (25%) move away from the area they grew up in to experience somewhere new, while only 1 in 10 (10%) of generation X are willing to move away from their childhood area to try something new.

A key factor behind many buyers’ move is their job, as a quarter (26%) look to buy a property closer to work. Many buyers looking to change jobs are caught in a predicament, as 2 in 5 (38%) look to buy somewhere that will give them better job opportunities, but nearly half (46%) are struggling to save the deposit they need to get in to those desired areas.

Education, misconceptions and help

Millennials believe knowledge is key, as 1 in 5 (19%) stated that a lack of education is the key reason behind the stress issues for first time buyers, whereas only 1 in 13 (8%) people from generation X believe a lack of education is to blame.

The process starts with confusion, as 43% of people found it complicated to choose a company or mortgage broker to get the ball rolling, while two thirds (63%) of buyers have stated that choosing a mortgage type is the most complicated part of the process.

Half (51%) of buyers who recently pulled out of the market explained that having their documents in order was the most stressful part of the process, with their little knowledge on key terms being a key issue.

The research has revealed the most common words in the mortgage process that buyers had either never heard of or didn’t understand:

Highest percentage of words that were never heard of: Highest percentage of words that were heard of but not known:
Conveyancing - 42% Stamp Duty - 32%
Family Offset Mortgage - 49% Right to Buy scheme - 33%
Starter Home Initiative - 51% APR - 34%
HLC - 58% Conveyancing - 34%
Tie-in period - 62% Family Offset Mortgage - 35%
Collar - 74% Flexible Mortgage - 35%

Over half the nation (52%) wish they’d been taught more in school about the mortgage process. Worryingly, almost as many people would seek mortgage advice from a parent (55%) as they would a professional (57%), despite the abundant challenges new buyers face.

The lack of education on mortgages has left buyers unaware of multiple schemes that can help first-time buyers get on the property ladder. 4 out of 5 (83%) buyers with children have never heard of a ‘Family Offset Mortgage’, over a third (37%) have never heard of the ‘Right to Buy’ scheme and nearly 4 in 5 (78%) are unaware of the ‘Starter Home Initiative’.

Mark Mullen, CEO and co-founder of Atom bank, said: “Today’s findings have showcased just how much impact the mortgage process can have on a first-time buyer, before they’ve even entered the market.”

“Buying a home is commonly the largest investment most people will make in their life time, which is stressful enough without worrying about the mortgage process. This makes it vital that buyers feel at ease from as early on in the process as possible. The results show that there is a real disconnect between advisors and buyers, as many people are seeking advice from their parents, who may have not purchased a property in decades.”


Notes to Editors

After securing its banking license in June 2015, Atom bank launched operations in April 2016, offering market-leading Fixed Saver accounts and secured business lending for small and medium-sized enterprises (‘SMEs’). From the start, Atom set out to build a customer-driven bank, designed to meet their new needs and optimised for mobile technologies.

Atom bank launched its first mobile mortgage product in December 2016 and has taken £1.8bn in deposits and lent over £2.4bn to small businesses and homeowners.

Atom is here to change banking, creating a disruptive and digital bank, keeping costs low and passing back the value to its customers. The Atom app is at the heart of the bank, with a 24/7 support team on hand to help with any customer queries through phone, chat, email and social media, working out of their Durham HQ.

The Atom executive team are highly experienced, having built and run some of the most well-respected banks in the UK. CEO Mark Mullen has 25 years’ experience in the sector and was previously CEO at the multi- award-winning telephone and internet bank first direct. The team are supported by a strong non-exec board, which includes Chairman, Bridget Rosewell. Bridget has an economics background, is also Chairman of the Driver Vehicle Standards Agency and on the board of Network Rail as well as a Commissioner with the National Infrastructure Commission.