Second steppers need ‘bank of mum and dad’
Lloyds Bank Second Steppers report found almost one in five first-time movers will require financial assistance from family or friends to help bridge the gap, typically asking for more than £22,000.
Despite increasing house prices boosting equity levels for second steppers, the latest estimate shows people living in their first home still have to find an extra £125,694 to plug the gap between the sale price of their current property and the cost of the house they would ideally move to – typically a detached property.
Almost three in four intended to raise the deposit required for their next property purchase from equity in their current home and more than half admitted to a raid on their savings. But some 14% said they were considering returning to family members to help them out – typically asking for £22,480.
This is up from £21,080 in 2014 and £21,273 in 2013. Half of these second steppers feel that they wouldn’t be able to make the next move on the property ladder without this financial assistance.
The research revealed that almost half had also required help with the deposit on their first property. The average loan size first-time buyers received from family and friends the first time around reached almost £24,000, only slightly more than they are hoping to borrow again from parents or grandparents to take their next step on the housing ladder.
Andrew Mason, Lloyds Bank mortgages director, said: “Parental support has been playing an important role in helping young people get on the property ladder for decades but this is being stretched further, with many second steppers continuing to be reliant on the bank of mum and dad to help them make the next move.”
Over the past 12 months second steppers have been increasing their monthly savings and overpaying on their mortgage to help prepare for their next house move. More than a third of second step homebuyers have increased their savings, compared to 29% in 2012. A similar number, 37%, have also been overpaying on their mortgage, compared to around a quarter in 2012.
“For many, parental support will be reaching its limit, as prices increase, so it’s encouraging to see so many second steppers also standing on their own two feet, planning ahead and taking action to top up their equity levels,” said Mason.
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