Second-time buyers stuck in existing homes
According to research carried out by property website Rightmove, aspiring second-time buyers now represent 29% of all purchases but are being squeezed by current market conditions with 11% reporting that their current home is worth less than they paid for it.
These homeowners are also unable to move up the property ladder due to the dearth of first-timers looking to purchase these types of homes, Rightmove reported that a fifth of potential sellers said there weren’t enough interested buyers in their area.
Two-in-five people looking to buy a home for the second time say their current home is too small for their family while 7% are reluctant to start a family because of a lack of space.
Ben Thompson, managing director at Legal & General Mortgage Club, added: “It has been obvious for quite some time that second steppers are stuck. Well over half don’t want to remain where they are, often because they have outgrown their current home.
“One of the biggest barriers to moving home is not being able to raise a deposit. Although this challenge won’t disappear any time soon, as house prices increase it will eventually become easier. The good news is that there are already grassroots signs that lending criteria is beginning to relax a little.
“For most second steppers, it is not just the deposit that is the problem. The level of stamp duty required to make that next move is near impossible to save; especially as household disposable income has suffered a hard squeeze over recent years.”
However, there could be good news on the horizon as a separate report by Connells has showed that activity among first-time buyers reached its highest level in four years during February.
The valuation firm found that the number of first-timer buyer valuations was 13% higher than at the same point a year before. It added that remortgaging had seen an even bigger boost, rising 44% compared with 12 months ago.
John Bagshaw, corporate services director at Connells Survey & Valuation, said: “Current mortgage holders are the biggest winners from Funding for Lending so far.
“The greater bulk of new deals emerging due to greater credit availability are aimed at existing homeowners, with sufficient equity to help bolster lenders’ balance sheets. Previous months have seen the lowest levels of remortgaging for some time, but looking forwards that seems set to change. The only major obstacle could be high remortgaging fees which need to be weighed against the longer term saving.”