Second steppers continue to struggle as housing market remains flat

26 Dec 2013 09:25 GMT

*Low equity levels continue to hinder moves up the housing ladder*

The home mover  market has remained relatively flat over the past year.
However, despite seeing some slight improvements, second steppers are still
bearing the brunt of the stagnant housing market, according to the latest
Lloyds Bank Home Movers Review.

  • Lloyds Bank estimates that there were around 319,000 home movers in 2012,
    largely unchanged from 2011.
  • Second steppers’ current equity position would account for just 7% of the price of
    a typical second stepper home. Compared with almost half(42%) in 2005.
  • The average home mover deposit in 2012 was £61,743. This is a rise of 59% from
    the average of £38,866 in 2002.

The Lloyds  TSB second stepper housing affordability measure – calculated as the
average price of a typical second stepper home1 less their current equity position2 as
a ratio of average earnings – stands at 4.6 times gross annual full-time average
earnings for 2012. This is significantly higher than a decade earlier when the ratio
was 2.9 times gross annual average earnings, and well above the long-term average
of 3.3.

However, second stepper affordability has improved slightly on the previous year  –
the Lloyds Bank measure reached its highest level, 5.4, in a quarter of a century in
2011. As more time passes since the peak of the market and the subsequent fall in
house prices in 2007-8, a higher proportion of potential second steppers will have
bought their first property when house prices had already fallen from their peak.
Despite this, second steppers in aggregate still face considerable challenges.

Low equity levels creating a barrier for second steppers
The typical potential second stepper in 2012 would have bought their first home in
2008. Such a homeowner is, on average, estimated to have an equity level of just
£11,5004  - equivalent to 7% of the average price for a semi-detached house
(£162,170). With the average cost of moving estimated at close to £9,0005, this level
of equity leaves very little to put down as a deposit on the next home. In addition,
there are also many potential second steppers who bought at the peak of the market
in 2007. Many of these homeowners are likely to be in an even worse financial
position, often with negative equity. It may also be the case that some first-time
buyers who had bought before or after the market  peak could also be facing
problems moving along the property ladder.

This situation is in stark contrast to 2002 when second steppers had an average
equity level of £45,000 – equivalent to 38% of the average price for a semi at the

South East is the least affordable area for second steppers
The South East is the least affordable UK region for second steppers with an
average affordability ratio of 6.3, followed by London (6.1). The West Midlands and
East Midlands (both  4.0)  are the most affordable regions for those in their first home
looking to take their next step on the property ladder.

Nitesh Patel, housing economist at Lloyds Bank, commented:
"Even though many of today’s second steppers won’t have bought at the height of
the market, many are still going to struggle to make that move up the housing ladder.
House prices have been falling or flat for the past four years, and as a result many
are still in a very low equity position.

"The difficulties faced by aspiring second steppers are having a considerable knock-
on impact for potential  first-time  buyers due to the resulting shortage of properties
available on the market with housing chains proving hard to establish."

Additional Key findings;

Home movers, 2012
The data in the section below refers to 'home movers'; defined as all those already in
the housing market (i.e.  they  currently  own  a  home).  Second Steppers are a subset
of home movers and refer only to those looking to get on the second rung of the
housing ladder.


  • Lloyds Bank estimates that there were around 319,000 home movers in 2012.

This represents a modest  (1%)  improvement on 2011. The total, however, is
only just over a third of the level in 2002 (865,100).

House Prices

  • Since the start of the housing downturn in 2007, the average price paid by a home
    mover has fallen by 18% from of £250,005 to £205,809 in 2012.
  • Nationally, home mover property prices fell by 1% in the past year. Several regions
    such as the North, West Midlands, East Anglia, South West and Wales have seen
    a slight increase (1%-2%).

Deposits  and  Advances

  • The average deposit put down by a home mover in 2012 was £61,743.  
    This was 59% higher than the average deposit of £38,866 in 2002.
  • Home movers in the capital put down the largest average deposit - £110,151 -
    31% of the average property value. In contrast, home movers in Northern Ireland
    put down the smallest average deposit (£32,600, or 25%).
  • The average mortgage advance for a new home mover is £144,067; a quarter higher than
    a decade ago (£116,599).


  • The average age of a home mover is 40 years old.  This is three years older than
    a decade ago (37 in 2002). Most of the increase in buyer age has occurred
    since 2007. (Source: CML)

Mortgage affordability improves for home movers

  • Typical mortgage payments for a home mover (i.e. those already in the housing 
    market) – stood at 31.5% average gross disposable earnings at the end of 2012. 
    This has come down sharply from an all time peak of 52% in 2007. This improvement 
    has been due to a reduction in both mortgage rates and house prices.

Offering a solution

  • Addressing the challenges faced by those looking to move home, but suffering 
    from a difficulty raising the deposit, Lloyds Bank offers the Lend a Hand Home mover mortgage.


  • The Lloyds Bank Lend a Hand Home mover product allows borrowers to take out a mortgage
    with a deposit of just 5%, but can access a rate that is the equivalent of products available
    for borrowers with a much larger deposit. This is because their funds are backed up with the
    savings of a helper, such as a parent, grandparent or other family member. At the same time,
    their helper benefits from a competitive savings rate as a legal charge is taken over the savings
    to offset the risk.