Second steppers are turning to family: Lloyds Bank
Nearly a fifth of people wanting to step up on the housing ladder will have to turn to friends and family to fund the purchase, research from Lloyds Bank has found.
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.”
The research showed first-time movers typically needed to find an extra £125,694 to fund the move to their preferred next home of a detached property.
Almost one in five required financial assistance from family or friends to help bridge this gap, asking for more than £22,000, and half of these second steppers felt they could not make the next move on the property ladder without this help.
The size of the deposit required is the biggest barrier to moving home, according to 44 per cent of the sample. Almost three in four (71 per cent) intend to raise the deposit required for their next property purchase from equity in their current home, and over half (57 per cent) will raid their savings.
But some 14 per cent said they were considering approaching family members for help – typically asking for £22,480. This is up from £21,080 in 2014 and £21,273 in 2013.
The report also found that the past 12 months has seen second steppers taking concerted action to help afford their move. More than a third (37 per cent) have increased monthly savings, compared to 29 per cent in 2012, while 37 per cent have been overpaying mortgage repayments compared to 27 per cent in 2012.
Adviser view
Ray Boulger, senior technical manager at London-based mortgage broker John Charcol, said: “I suspect there is much greater variation around the country than is apparent in such average figures as supplied by Lloyds Bank.
“For instance, I imagine there are some borrowers who bought pre-credit crunch who may have 100 per cent mortgages and who live in areas without significant house price inflation. They may have little or no equity to use to trade up.
“But looking at this realistically, there is the opportunity for families to get together and perhaps grandparents may have a lot on deposit earning little, which they could lend and get a better return on in an agreement with grandchildren.”
