It may have been only first-time buyers who relied on the Bank of Mum and Dad in the past, but now “second steppers” are going cap-in-hand to their parents to move up the property ladder.
Nearly a fifth of young homeowners are turning back to their families for help in buying their second property as house prices continue to rise, research by Lloyds has found.
Despite house price increases boosting the equity on their first property, second steppers are having to find an average of £125,694 to buy their next ideal home, most often a detached property. If buyers decide to move to a semi-detached, the gap reduces to £17,370. Almost half of young couples looking to buy larger family houses said that the size of deposit needed was the biggest barrier to moving.
In a survey of second steppers, 14 per cent said that they would need help from their parents to move to their second home, asking for an average of £22,480, up from £21,080 in 2014 and £21,273 in 2013.
The research showed that almost half of all first-time buyers needed help to put down a deposit, with the average loan from families reaching £24,000. More than 40 per cent of those asking for support admitted that parents had to make sacrifices to their own lifestyle.
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Elliot Nathan, of John Charcol, the mortgage broker, said that he was seeing first-time buyers who were asking for up to 80 per cent of their deposits from parents. “More and more people are doing that because property prices are rising higher than wages,” he said. He added that many second-time buyers who could not rely on their parents were turning to the government’s Help to Buy scheme to buy bigger properties than their usual deposits would allow.
Andrew Mason, Lloyds’ mortgages director, said: “Parental support has been playing an important role in helping young people to 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 to make the next move.”
The bank’s research showed that second steppers who could not be helped by parents had been increasing their savings and overpaying on their mortgages to prepare for their next moves. The proportion of potential second buyers putting aside savings grew from 29 per cent in 2012 to 37 per cent. One in five young couples also said they planned to have children later in life because of the challenges in moving to a family home.