News Column

Second Steppers Continue to Struggle as Housing Market Remains Flat

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LONDON, UNITED KINGDOM -- (Marketwire) -- 02/04/13 -- This is the third Lloyds TSB Home Movers Review, tracking conditions for those who already own a home. The review is based on data from the Halifax house price database, the Council of Mortgage Lenders, the Office for National Statistics and the Bank of England.

The home mover market has remained relatively flat over the past year. However, despite seeing some slight improvements, second steppers are still bearing the brunt of the stagnant housing market, according to the latest Lloyds TSB Home Movers Review.

-- Lloyds TSB estimates that there were around 319,000 home movers in 2012, largely unchanged from 2011.-- Second steppers' current equity position would account for just 7% of the price of a typical second stepper home. Compared with almost half (42%) in 2005.-- The average home mover deposit in 2012 was GBP 61,743. This is a rise of 59% from the average of GBP 38,866 in 2002.

The Lloyds TSB second stepper housing affordability measure - calculated as the average price of a typical second stepper home(1) less their current equity position(2) as a ratio of average earnings - stands at 4.6 times gross annual full-time average earnings for 2012. This is significantly higher than a decade earlier when the ratio was 2.9 times gross annual average earnings, and well above the long-term average of 3.3.

However, second stepper affordability has improved slightly on the previous year - the Lloyds TSB measure reached its highest level, 5.4, in a quarter of a century in 2011. As more time passes since the peak of the market and the subsequent fall in house prices in 2007-8, a higher proportion of potential second steppers will have bought their first property when house prices had already fallen from their peak. Despite this, second steppers in aggregate still face considerable challenges.

Low equity levels creating a barrier for second steppers

The typical potential second stepper in 2012 would have bought their first home in 2008(3). Such a homeowner is, on average, estimated to have an equity level of just GBP 11,500(4) - equivalent to 7% of the average price for a semi-detached house (GBP 162,170). With the average cost of moving estimated at close to GBP 9,000(5), this level of equity leaves very little to put down as a deposit on the next home. In addition, there are also many potential second steppers who bought at the peak of the market in 2007. Many of these homeowners are likely to be in an even worse financial position, often with negative equity. It may also be the case that some first-time buyers who had bought before or after the market peak could also be facing problems moving along the property ladder.

This situation is in stark contrast to 2002 when second steppers had an average equity level of GBP 45,000 - equivalent to 38% of the average price for a semi at the time.

South East is the least affordable area for second steppers

The South East is the least affordable UK region for second steppers with an average affordability ratio of 6.3, followed by London (6.1). The West Midlands and East Midlands (both 4.0) are the most affordable regions for those in their first home looking to take their next step on the property ladder. (See Table 1)

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)

House Prices

- 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.


Table 1: Second Steppers Affordability(i) by Region, 2002-2012(ii)---------------------------------------------------------------------------- 2002-2012 Percentage 2002 2012 Points changeNorth 2.7 4.2 1.5Yorkshire and Humberside 2.5 4.1 1.6South East 3.2 6.3 3.0South West 3.3 5.7 2.4East Anglia 2.4 4.8 2.4Northern Ireland 2.6 5.0 2.4Wales 2.5 4.6 2.1Greater London 4.1 6.1 2.0West Midlands 2.2 4.0 1.9East Midlands 2.3 4.0 1.8North West 2.9 4.6 1.7Scotland 2.7 4.2 1.6UK 2.9 4.6 1.7----------------------------------------------------------------------------Sources: Lloyds TSB, CML, Halifax and ONS(i)Average price of a typical second stepper home(1) less their currentequity position as a ratio of average earnings.(ii)All years refer to 12 months to November.Table 2: Number of homebuyers (purchasing with a mortgage) - UK===================================================================== Number of Annual % Number of Annual % Home movers change FTBs change=====================================================================2002 865,100 16% 531,800 -6%=====================================================================2003 882,200 2% 369,600 -31%=====================================================================2004 886,700 1% 358,100 -3%=====================================================================2005 615,600 -31% 363,800 2%=====================================================================2006 712,100 16% 402,800 11%=====================================================================2007 653,600 -8% 359,900 -11%=====================================================================2008 320,600 -51% 192,300 -47%=====================================================================2009 315,000 -2% 196,600 2%=====================================================================2010 339,600 8% 198,600 1%=====================================================================2011 315,500 -7% 193,000 -3%=====================================================================2012(i) 318,667 1% 216,000 12%=====================================================================Source: CML,(i) Lloyds TSB estimateTable 3: Home movers: Average House Price % Change, 2002-2012(ii)=========================================================================== 1 year 10 year % % 2002 GBP 2011 GBP 2012 GBP change change===========================================================================North 97,747 146,019 147,142 0.8% 51%===========================================================================Yorkshire and the Humber 106,936 160,342 159,854 -0.3% 49%===========================================================================North West 116,213 165,599 158,783 -4.1% 37%===========================================================================East Midlands 121,703 163,070 162,859 -0.1% 34%===========================================================================West Midlands 140,546 171,632 175,323 2.2% 25%===========================================================================East Anglia 146,661 194,287 195,920 0.8% 34%===========================================================================Wales 108,235 154,115 156,093 1.3% 44%===========================================================================South West 163,871 217,543 219,647 1.0% 34%===========================================================================South East 206,245 264,871 263,910 -0.4% 28%===========================================================================Greater London 268,026 362,222 357,170 -1.4% 33%===========================================================================Northern Ireland 110,492 148,097 129,829 -12.3% 18%===========================================================================Scotland 101,217 169,485 167,058 -1.4% 65%===========================================================================UK 155,466 207,126 205,809 -0.6% 32%===========================================================================Source: Lloyds TSB calculations, Halifax(ii)All years refer to 12 months to NovemberTable 4: Home movers: Average Price And Deposit By Region, 2012(ii)=========================================================================== Average Deposit as % House Price Average of purchaseRegion (GBPs) Deposit (GBPs) price===========================================================================North 147,142 38,345 26%===========================================================================Yorkshire and the Humber 159,854 43,144 27%===========================================================================North West 158,783 40,537 26%===========================================================================East Midlands 162,859 46,513 29%===========================================================================West Midlands 175,323 51,001 29%===========================================================================East Anglia 195,920 62,616 32%===========================================================================Wales 156,093 45,095 29%===========================================================================South West 219,647 73,648 34%===========================================================================South East 263,910 83,725 32%===========================================================================Greater London 357,170 110,151 31%===========================================================================Northern Ireland 129,829 32,600 25%===========================================================================Scotland 167,058 47,311 28%===========================================================================UK 205,809 61,743 30%===========================================================================Source: Lloyds TSB calculations, Halifax (ii)All years refer to 12 months toNovember

(1) The typical second stepper home is assumed to be a semi detached home based on consumer research by Lloyds TSB which found that 60% of people expect to take their second step on the property ladder into a semi-detached home:

(2) Current equity position is defined as the sum of deposit, capital repayments (variable rate mortgage using average LTV for an FTB and the average mortgage rate for new business undertaken by UK banks produced by the Bank of England) and change in the average FTB house price over the period. The calculation is based on house purchasers moving 4 years after their first purchase, which is based on our market research (see below).

(3) The Second Steppers consumer research was undertaken by BDRC Continental ( on behalf of Lloyds Banking Group. Fieldwork took place in January 2011. Around 400 interviews were collected from a representative online consumer panel (Valued Opinions). Further methodological detail is available on request. One of the findings showed that FTBs stayed in their first property on average for 4 years before moving on to their next home.

(4) Based on calculation from the Halifax House Price database

(5) LTSB estimate in


The housing affordability measure for second steppers is defined as the average price for a typical second stepper home adjusted for the equity position from their current home as a ratio of average earnings. The typical second stepper home as assumed to be a semi detached home. Their current equity position is defined as the sum of deposit, capital repayments (variable rate mortgage using average LTV for an FTB and the average mortgage rate for new business undertaken by UK banks produced by the Bank of England) and change in the average FTB house price over the period. The calculation is based on a single income and is, therefore, conservative.

The multiple of 3.3 is in line with the average house price to income ratio for a second stepper over the past 25 years (1987-2012). (Source: Halifax).


This research is based on data from the Halifax's housing statistics database as well as the Council of Mortgage Lenders, the Office for National Statistics and the Bank of England.

1. House Prices

The prices used in this research are simple arithmetic ('crude') averages. These prices are not standardised and therefore can be affected by changes in the sample from period to period.

2. Average Earnings

Average earnings figures are from the ONS's "Annual Survey of Hours and Earnings" (ASHE) and refer to the means for full-time employees.

At local authority level, figures for the relevant local authority (residence based) are used in the majority of cases. Where this has not been possible due to data unavailability, the relevant regional average has been used.

3. Historic figures on the number of home movers and first time buyers have been sourced from the Council of Mortgage Lenders (CML).

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