Although the housing market is improving in the UK, the group that is being left behind is referred to as ‘second steppers.’ These are people who bought homes, usually during the height of the housing market back in 2006 or 2007, and paid top prices for their homes.
Since real estate has been devaluing over the past years since the market bottomed out in 2008 and 2009, many of these homes are now worth a fraction of what they once were. As a result, second steppers who are now looking to qualify for a bigger home are being stuck in their current homes for a number of reasons.
According to a recent survey conducted by Lloyds TSB, approximately 61% of first time homebuyers who are ready or in need of moving are now unable to climb up the housing ladder. Some of this is due to the fact that mortgage loans are harder to come by and also because these homes are not worth the amount still owed on them as a result in the housing crash.
Furthermore, the survey indicates that one out of every five people questioned believe that it will be hard to qualify for a new mortgage without the breaks given to first time buyers. As second steppers, they are no longer eligible for the first time homebuyer’s programme. Then, almost half of those respondents felt it would even be more difficult to qualify for a first-time mortgage as well.
With a whole new set of challenges facing them, first time home sellers should be given more support, according to Stephen Noakes who is the Lloyds TBS mortgage director. Their role in revitalizing the housing industry is vital and government should assist them in any way possible.
When there are at least 360,000 homeowners who are unable to move up the ladder, it is evident that the market will stagnate without dealing with restrictive lending practices. Even though some may not be in negative equity, they do not have enough equity to sell their homes due to falling prices and will not be able to sell for a profit to move up the property ladder.