Nitesh Patel, housing economist at Lloyds TSB, commented:
"Even though many of today's second steppers won't have bought at the height of the market, many are still going to struggle to make that move up the housing ladder. House prices have been falling or flat for the past four years, and as a result many are still in a very low equity position.
"The difficulties faced by aspiring second steppers are having a considerable knock- on impact for potential first-time buyers due to the resulting shortage of properties available on the market with housing chains proving hard to establish."
Additional Key findings;
Home movers, 2012
The data in the section below refers to 'home movers'; defined as all those already in the housing market (i.e. they currently own a home). Second Steppers are a subset of home movers and refer only to those looking to get on the second rung of the housing ladder.
- Lloyds TSB estimates that there were around 319,000 home movers in 2012. This represents a modest (1%) improvement on 2011. The total, however, is only just over a third of the level in 2002 (865,100). (See Table 2)
- Since the start of the housing downturn in 2007, the average price paid by a home mover has fallen by 18% from of GBP 250,005 to GBP 205,809 in 2012.
- Nationally, home mover property prices fell by 1% in the past year. Several regions - such as the North, West Midlands, East Anglia, South West and Wales - have seen a slight increase (1%-2%). (See Table 3)
Deposits and Advances
- The average deposit put down by a home mover in 2012 was GBP 61,743. This was 59% higher than the average deposit of GBP 38,866 in 2002.
- Home movers in the capital put down the largest average deposit - GBP 110,151 - 31% of the average property value. In contrast, home movers in Northern Ireland put down the smallest average deposit (GBP 32,600, or 25%).
- The average mortgage advance for a new home mover is GBP 144,067; a quarter higher than a decade ago (GBP 116,599). (See Table 4)
- The average age of a home mover is 40 years old. This is three years older than a decade ago (37 in 2002). Most of the increase in buyer age has occurred since 2007. (Source: CML)
Mortgage affordability improves for home movers
- Typical mortgage payments for a home mover (i.e. those already in the housing market) - stood at 31.5% average gross disposable earnings at the end of 2012. This has come down sharply from an all time peak of 52% in 2007. This improvement has been due to a reduction in both mortgage rates and house prices.
Offering a solution
- Addressing the challenges faced by those looking to move home, but suffering from a difficulty raising the deposit, Lloyds TSB offers the Lend a Hand Home mover mortgage.
- The Lloyds TSB Lend a Hand Home mover product allows borrowers to take out a mortgage with a deposit of just 5%, but can access a rate that is the equivalent of products available for borrowers with a much larger deposit. This is because their funds are backed up with the savings of a helper, such as a parent, grandparent or other family member. At the same time, their helper benefits from a competitive savings rate as a legal charge is taken over the savings to offset the risk.
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