17th October 2014
Getting on to the property ladder is difficult but once you’re on the problems don’t end as so-called ‘second steppers’ have to find an extra £60,000 to move up a rung.
Figures from Lloyds Bank reveal moving into a second home means borrowers have to find an extra £58,400, over double the average first-time buyer deposit of £25,848, and £15,000 more than they would have had to find in 2013.
Growing house prices have proved difficult for first-time buyers to own their own home and that the gap is widening between those who can afford to make the move into a second home and those who can’t.
Despite second steppers benefitting from recent house price growth, which has boosted their equity they are unable to buy a bigger home as the properties they want to buy have also increased in price. There are regional variations in the cost of moving up the ladder, in the West Midlands, second steppers will on average have to find £21,000, while in East Anglia they will need to find £80,800 to make the jump.
The inability for second steppers to move has a detrimental effect on first-time buyers who need the homes that second steppers want to sell. The fact that there are first-time buyers clamouring for starter homes –fuelled in part by the government’s Help to Buy scheme – means that although second steppers are finding the financials of moving tough, there is confidence that the market is improving.
Just a quarter of second steppes see economic uncertainty as a key challenge, reducing by 10 percentage points in a year. The number of people seeing negative equity as a challenge has also dropped to 14%.
Just a third of second steppers see a lack of first-time buyers as a problem but for 46%, fees and charges associated with moving are a barrier to buying a new home.
Marc Page, mortgages director at Lloyds Bank, said: ‘The jump to the next step is growing quickly for second steppers, with the gap to the second home now being almost £60,000 nationally.
‘However, as house prices are rising and barriers to the next step are reducing, confidence about selling the first home and being able to move up is increasing. For most regions of the country this is helping people to make that jump across the gap to the next rung on the ladder.’