Second steppers turn to bank of mum and dad to move up the ladded


According to the latest research from Lloyds TSB, one in six second steppers are contemplating turning to the bank of mum and dad to plug the gap between the value of their first home and the cost of the house they would ideally move to.

The majority of second steppers will be hoping to use savings (59 per cent) or equity in their current property (77 per cent) to fund the move to their second property.

But 18 per cent are also considering going back to their family – such as parents and grandparents – to ask for financial support.

The average loan size first-time buyers received from family or friends reached almost £13,700, up from £13,000 last year.

But the amount requested by second steppers to help them move up the ladder has increased by almost £7,000 in the past 12 months to reach £19,216, up from £12,746 in 2011).

The research highlights that almost two thirds (61 per cent) of second steppers have wanted to climb up the ladder in the past 12 months but have been unable to do so as they face an increasing number of challenges.

Over half (55 per cent) of all those questioned agree that not having enough saved to cover the deposit is preventing them from taking the second step on the property ladder.

However, over three quarters (78 per cent) of second steppers are struggling to find a suitable or affordable property.

The additional capital needed by second steppers to trade up – calculated as the price difference between a typical first-time buyer home (a flat) and the house desired by many second-steppers (semi-detached) – currently stands at an average of £43,800 – a 143 per cent increase on the £18,000 that was required 10 years ago. This gap has increased by £3,000 over the past year.

Whilst a third of first time buyers surveyed are currently living in flats, over half hope their next move will be to a three bedroom house.

The average value of a flat currently stands at £149,321 compared with £193,156 on average for a semi-detached house. This means that those looking to make this move face a 29 per cent premium just to trade up, before adding on the cost of moving or the potential that there may be an equity shortfall in their current property.

Second steppers in the South East face the biggest premium to trade up, needing almost £94,000 to trade up from the typical first property to their second home. Londoners face the second highest premium and need to find £63,522 to fund the same move.

Lloyds TSB mortgages director Marc Page said: “We already know that second steppers face a number of tough challenges, and in many ways have been the hardest hit by the subdued housing market, so it is unsurprising that they are struggling to fund the gap needed to trade up to their preferred second home.

“Parents have long been helping to fund their children’s first home, but many are now having to provide further support as they move up the ladder. This indicates that these customers still need further support.

“To achieve a sustainable housing market we need to see movement throughout the market. If second steppers get stuck on the first rung, movement at the bottom half of the ladder comes to a standstill.”