House price rises are providing a welcome boost to young couples and families climbing on to the second rung of the property ladder, a research suggests.
House price rises are providing a welcome boost to young couples and families climbing on to the second rung of the property ladder, research suggests.
Second-time buyers are benefiting from equity gains, which are helping to plug the average £136,000 price gap between their current property and their next home.
But research commissioned by Lloyds Bank into Second-Time Buyers revealed the recent rise in interest rates and predicted future hikes were causing some concerns for this group of potential buyers.
The study revealed, despite the significant improvement in market conditions in the last five years, these so-called Second Steppers identified difficulties finding a deposit and a lack of suitable ‘family friendly’ properties as barriers to their next move.
Indeed, many were considering staying put and making improvements to their current home rather than moving house because a new purchase was not within their grasp.
According to the survey of over 500 first-time buyers looking to purchase their next home, the typical Second Stepper bought their first property in 2014 when the average price of a first-time home was £167,137.
Statistics suggest this ‘average’ home could now sell for £211,296, which amounts to an equity injection of £85,877.
The gap between the sale price of the second stepper’s current property and the cost of their ideal home is now at £135,000.
However, Lloyds said, with the equity injection of £85,877 the gap could be reduced by 63%, leaving second-time buyers with only an extra £50,108 to add to their existing mortgage.
Andrew Mason, Lloyds bank mortgages director, said: “Second Steppers are optimistic about the market conditions, which are now better than they’ve been for over five years, and with many building up substantial equity in their homes and more first-time buyers entering the market, their next move may not be far away.
“However, the interest rate rise we saw late last year marks the first increase first-time sellers have seen since becoming homeowners and even though it was small it has caused some concern.”
