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(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: www.lloydsbankinggroup.com/media1/press_releases/2012_press_release_brands/ltsb/2502_second.asp.

(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 (bdrc-continental.com) 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. www.lloydsbankinggroup.com/media1/press_releases/2012_press_release_brands/ltsb/2502_second.asp

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

(5) LTSB estimate in http://www.lloydsbankinggroup.com/media/pdfs/LTSB/2012/2701_Cost.pdf

THE AFFORDABILITY CALCULATION:

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).

DATA SOURCES:

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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