Abstract Analyses of neighbourhood socioeconomic characteristics and health indicators consistently show that health is worse in poorer neighbourhoods. However, some studies that examined neighbourhood effects separately for individuals of different socioeconomic position found that poor people may derive health benefits from living in poor neighbourhoods where they are socioeconomically congruous. This study investigates whether such patterns may be driven by psychosocial factors. The sample consisted of 4871 mothers in the Millennium Cohort Study aged 14–53. The outcomes analysed were neighbourhood friendship, emotional support, self-esteem and depression or anxiety. Neighbourhood status was classified by residents' educational and occupational status derived from the 2001 Census. We used multilevel logistic regression, adjusting for mothers' socio-demographic characteristics: first analysing health by neighbourhood status separately for the highest and lowest status mothers, then testing for modification in the association between neighbourhood status and health, by individual status. Results show that for highest status mothers, living in mixed or high status neighbourhoods compared to low status neighbourhoods significantly reduced the odds of having no friends in the neighbourhood by 65%. Living in high status neighbourhoods compared to low status neighbourhoods also significantly reduced the odds of depression or anxiety for highest status mothers by 41%. No associations were found for emotional support or self-esteem amongst highest status mothers. No associations were found for any outcome among lowest status mothers. In conclusion, low status mothers in England did not have better social support, self-esteem, or mental health when living in low status neighbourhoods compared to high status neighbourhoods; any benefits of socioeconomic congruity may have been counteracted by neighbourhood deprivation. Nevertheless, we found that mothers of high status do have significantly better neighbourhood friendship and mental health when living in socioeconomic congruity within neighbourhoods. Whether these associations are causal or are another reflection of material advantage remains unclear.