NEWS: 1 in 3 Britons Find Mortgage Jargon Difficult to Understand

11-February-2025
11-February-2025 11:20
in News
by Luka Ball
1 in 3 Britons Find Mortgage Jargon Difficult to Understand

A new survey has revealed that 35% of Britons believe mortgage product names are difficult to understand, with many feeling uncertain about their knowledge of key financial concepts.

The research highlights gaps in financial literacy in the UK, particularly among first-time buyers. Many feel overwhelmed by complex mortgage jargon. It also suggests that lenders have more work to do when it comes to making their products accessible to modern borrowers.

The study found that 71% of Brits believe mortgages should be taught in schools, with this figure rising to 76% among the silent generation (aged 78+). Many respondents felt that early financial education could better prepare people for navigating the property market and understanding mortgage terminology.

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Despite mortgage rates dominating headlines, the phrase "What is a mortgage?" receives an average of 4,400 Google searches per month, indicating widespread confusion.

The most misunderstood term in property management and mortgages is ‘LPA’ (Lasting Power of Attorney), with only 7% of people claiming to know what it means. However, 52% of respondents were able to define ‘fixed-rate mortgage’ correctly. ‘Stamp duty’ (47%) and ‘mortgage term’ (46%) followed closely behind in terms of recognition.

First-time buyers seem to be particularly affected by mortgage jargon, with 60% believing it slows down their home purchase and 52% worried they could miss out on better deals due to a lack of understanding of what’s available.

Over a third (35%) said that mortgage product names make it difficult to grasp what they actually are, while 39% expressed a desire for simpler, more transparent product names.

See similar: Are Mortgage Rates Going Down?

Is Mortgage Terminology Accessible?

The research also found that financial accessibility remains a concern. While accessibility is often a top priority for online shopping, only 35% of respondents were satisfied with the accessibility of their financial services’ websites and apps, and just 13% were ‘very satisfied.’

Bank statements proved to be one of the least accessible aspects of personal finance, with many customers struggling to read them in both digital and print formats. A quarter (27%) of respondents indicated that more accessible financial statements would significantly improve their ability to manage their finances.

Mortgage affordability also remains a significant hurdle. In 2023, 24% of first-time buyers are receiving financial support from family or other sources. Among those, 83% said it would be ‘impossible’ to get on the property ladder without external assistance. Most commonly, this support comes in the form of lump sum contributions towards deposits (58%) or help with moving costs (32%).

Recognising the challenges, banks are beginning to simplify their offerings. One lender recently renamed its ‘Joint Borrow Sole Proprietor Scheme’ to the more intuitive ‘Income Booster’ scheme after seeing a rise in young people applying for mortgage with financial assistance from family members.

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Empowerment Through Financial Education

Economic uncertainty has led to heightened public engagement with finance and economics, particularly among young people.
Nearly one in six renters and mortgage holders (15%) reported paying closer attention to news about the UK economy in the past year, rising to 22% among 18 to 34-year-olds. It’s possible that the wealth of resources available online have helped make this easier.

But while financial education is on the rise, there are still blind spots. 88% of people have heard of the Bank of England Base Rate, however, over a quarter (26%) admitted they don’t know what it means.

Additionally, 35% had never heard of the Monetary Policy Committee, and nearly half (49%) were unfamiliar with swap rates, a key factor influencing fixed-rate mortgage pricing.

1 in 3 Britons Find Mortgage Jargon Difficult to Understand

Underscoring a Need for Greater Financial Clarity

Financial literacy will always be essential to get the most out of your mortgage, but progress should also be made to help make financial products simple to navigate.

Industry experts stress the importance of clear, accessible financial guidance to help consumers navigate an increasingly complex market.

That being said, if you’re unsure what your options are, this is where an experienced mortgage broker can be a great asset.

At Clifton Private Finance, we have a team of dedicated specialists who can offer tailored advice on your circumstances and match you with a solution that aligns with your long-term financial goals.

We have relationships with mainstream, private and specialist lenders, and we’ll always work on your behalf to find the most suitable solution for your circumstances.

To see what we can do for you, call Clifton Private Finance at 0117 313 5258 or book a free consultation below.

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