Lloyds TSB Equity Support Scheme to help property prisoners

Lloyds TSB champions the need for a sustainable housing market and today identifies the borrowers key to achieving this. Releasing its inaugural report, Lloyds TSB introduces the plight of Second Steppers.  

Second Steppers are homeowners looking to sell their first home and move on up the ladder. In today's market many are finding that they can't.

First time buyers intend to stay in their first home for an average of four years. This means that borrowers who are planning to move in 2011 are now facing a new set of challenges. A combination of purchasing homes at the peak of property prices and making the next move in a declining property market means many are finding it just as tough to move up the ladder as it was to get on it.

First Time buyer and Second Step property sales continue to be in decline, in contrast to the higher rungs where transaction levels are improving. 

Property transactions below £120,000 fell by 14% through 2010 and those between £120,000 and £200,000 reduced by 13%. Properties valued above £200,000 experienced stronger sales levels, the number of sales over £500,000 increased by 31%.

A difference of £48,216 exists between the price of a typical first time buyer and typical Second Step property

The majority of Second Steppers (84%) expect a first time buyer to buy their home

The average first time buyer house price has declined by £28,041 in the period since the typical Second Stepper bought their first home

19% of Second Steppers do not have enough equity in their current property to move 

Just 13% of Second Steppers will reduce the asking price if they can't sell their home at the current price

A quarter of Second Steppers will look to rent their property out if they can't sell it at the current asking price

Offering a solution

Addressing the challenges faced by those looking to move home, but suffering from a reduction in equity, Lloyds today launches its new Equity Support Scheme.

The scheme, which makes moving home possible for customers with low or negative equity, is designed to maintain momentum in the market. It allows borrowers 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 in to their new home.

Example:

Current property value £110,000
Mortgage £130,000
Current LTV 118%

New property £120,000
Mortgage £130,000
Additional customer deposit £10,000
LTV 108%

Colin Walsh, Managing Director, Mortgages, Lloyds Banking Group explains: "The challenges facing First Time Buyers receive a lot of deserved attention but to achieve a sustainable housing market, we have to look at every rung of the ladder. Many borrowers that bought their first home in more recent years have found their equity position hit hard by the period of house price decline.

"It's right that we can continue to help people buy their first home, but we shouldn't underestimate the role Second Steppers have in making that happen. They're the link between first time buyers and the rest of the market - and at the moment, many are finding it just as tough to make the next move as it was to make their first."