Friday, January 28, 2011

Won’t somebody think of the children?

PLIGHT OF ‘SECOND STEPPERS’ STUCK ON HOMES LADDER Read more: http://www.express.co.uk/posts/view/225676/Property-Plight-of-second-steppers-stuck-on-homes-ladderProperty-Plight-of-second-steppers-stuck-on-homes-ladder

HOME owners are struggling to climb the property ladder, leading to a bottleneck which keeps out first-time buyers, one of Britain’s biggest mortgage lenders warned yesterday. A combination of falling house prices, a drought of mortgage funds and a shortage of first-time buyers means it is difficult for “second steppers” to trade up. Many with growing families are trapped in small first-time buyer homes because they are unable to raise the average of almost £50,000 they need to move on, said Lloyds TSB. And the knock-on effect means first-time buyers at the bottom of the chain cannot find properties for sale.

Posted by drewster @ 12:32 AM (1990 views)
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20 thoughts on “Won’t somebody think of the children?

  • “Since this group bought their first home, the average price of a starter property has fallen from £148,001 to £119,960. The situation is made worse because many who took out 95 per cent mortgages did not need to put down a large deposit that would have cushioned them from house price falls. And 43 per cent admit they have been unable to save money since joining the property ladder.”

    Which seems to be an indicate that a lot of buyers in the bubble years were lured into taking on too much debt. If you can’t save, what happens if you get sick, made redundant or some other setback?

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  • If the “second steppers” are stuck on the first rung due to negative equity, then future FTBs will be able to leap straight onto the second rung.

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  • “If the “second steppers” are stuck on the first rung due to negative equity, then future FTBs will be able to leap straight onto the second rung.”

    That’ll ding dang do for me.

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  • the number cruncher says:

    We are starting to see the house price crash creeping up the ladder, First the FTB, now the second steppers and so on.

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  • “JON and Laura Concanon bought their two-bedroom terrace house in Epping, Essex, for £249,000 at the peak of the property boom in 2007…. But our house was recently valued at £235,000, which means we’re in negative equity and our options for moving are limited. We have had very little chance of saving for a deposit, not to mention moving costs.”

    How did they manage that? Mortgage of 95% = £236,550 combined with over three years of capital repayments leaves an amount greater than 235,000?? Really? Unless it was interest only and they were assuming the house fairy was going to pay for the house.

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  • £249,000 x 0.95 x 6% / 12 = £1,182.75 a month they were paying in interest alone to live in a two-bed terrace, with nothing spare to pay off the capital. More fool them.

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  • sibley's b'stard child says:

    Ah VI property correspondent Sarah O’Grady. This’ll be same Sarah O’Grady that only this week was gleefully reporting that HPs will surge this year. Stupid bint doesn’t understand cause and effect.

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  • im in exactly the same situation. although i have very little money tide up in the property, as i bought in 1999 and paid my mortgage off in 2007. i am not going to step up as long as ftb’s dont or cant pay a reasonable price on mine and the detached we want is so much more money by comparison. the gap is to big in my area. i want prices to fall so that the gap closes. trouble is i cant see that happening any time soon here as we have a huge net migration from eastern europe, and BTL is rife.

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  • No-one could see this coming could they. F*ck these media types are quick!

    After looking round several over-priced properties in 2007 that would take all my salary to afford it was fairly obvious that if house prices rose or stayed still I would never be able to move up the ladder, unless I received a massive salary increase, and if house prices fell I’d have to pay off -ve equity from my non-existent savings.

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  • @phdinbubbles (Friday, January 28, 2011 08:50AM) the mortgage is INT ONLY – from the article “We put down a five per cent deposit and took a fixed-rate mortgage of six per cent on interest only, and we’ve recently gone on to our lender’s standard variable rate,” said Laura.

    But fear not all you Second Steppers ! as Lloyds (Taxpayer owned) Bank provides more startling innovation in the mortgage market

    “Lloyds launches deal for borrowers in negative equity”

    Lloyds Banking Group has launched a new deal for existing borrowers in negative equity that is available direct only. The Second Steppers scheme will allow borrowers who are in negative equity of up to 120% LTV to move to a property of the same value, buy a bigger home or downsize. Customers can move without increasing their existing levels of borrowing and channel any additional funds into their new home.

    Full details @ http://www.mortgagestrategy.co.uk/latest-news/lloyds-launches-deal-for-borrowers-in-negative-equity/1025255.article

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  • when you say lloyds you mean tax payer, right?

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  • @inbreda – yep as per line above “But fear not all you Second Steppers ! as Lloyds (Taxpayer owned) Bank provides more startling innovation in the mortgage market”

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  • sibley's b'stard child says:

    @ 8

    Jack, I don’t understand the rationale behind this (and i’m sure it’s not altruistic)?

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  • Sibs – I’m trying to find out a bit more about the deal (note it is direct only – not for pesky broker involvement) but I picked this up from the comments section – “I might be being overly simplistic but wouldn’t using the deposit for the new property to reduce the current LTV also lessen the lenders exposure!”

    If Mr Wadsworth is about he’ll probably spot the advantage to the Bank with a quick crunch of the LTV numbers.

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  • Interesting bit of double think from the Express here: falling property prices is bad for first-time buyers!

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  • @jack c
    For some reason my brain didn’t register the ‘interest only’ bit when reading the article – maybe it had difficulty comprehending how anyone could spend a quarter of a million on a house on interest only without considering the possibility of repaying the principal and then having the audacity to moan about not being able to trade up to a more expensive house.

    The deal from Lloyds you mention sounds similar to the 125% mortgages being offered by Nationwide that were discussed on here a couple of years ago (with the LTV being reduced by the borrower stumping up more cash – a bit of a niche product):

    http://housepricecrash.co.uk/newsblog/2009/07/blog-return-of-sub-prime-mortgages-24272.php

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  • phdinbubbles – even more worrying is the fact that this is not an isolated case! there are roughly 38% of borrowers with mortgages in the same situation and this excludes those with BTL and endowments (FSA conducted a survey and then issued guidance)

    As you say the Lloyds deal looks like a fresh coat of paint on the Nationwide scheme – my personal view is that it will have limited take up.

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  • mark wadsworth says:

    Jack C, these high LTV mortgages are like a lower interest mortgage with a MIG or whatever it was called.

    Where’s the difference between a 120% mortgage and an 80% mortgage and a large personal loan?

    Let’s say the 80% mortgage would cost 5% interest and the large personal loan would cost 12%, that averages out at 7.33%, if Lloyds can get away with charging 7.33% it will come out ahead, on average across a number of deals.

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  • mark wadsworth – thanks for your input

    What do we get when we mix a mortgage and a personal loan? – a Northern Rock “together mortgage” – I’m now just about to rage around the room like the lad in TC’s greatest ever freakout video posted on the Anyone for a nice cup of tea? thread.

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