A report by Lloyds Bank has revealed that the number of homeowners moving house in the first half of 2016 reached a level that was last seen in 2008. The report, which drew on the Group’s own data together with data from the Council of Mortgage Lenders, the Bank of England and the Office for National Statistics, shows that 174,700 moved home in the first six months of the year compared to 160,900 for the same period in 2015 – a nine percent increase.
The report suggests that home movers are finding it easier to take the second step on the property ladder.
In the first half of 2009, the number of buyers moving up the housing ladder was at a market low of 117,900. That number has grown by 48 per cent since then, although the current numbers are still around half the pre financial-crisis level of 327,600 for the first half of 2007. According to Lloyds, the growth can be attributed to improved affordability of homes for ‘second steppers’, as the increase in value of first homes has offered owners better deposits to use for their next property purchase.
The report calculates the affordability of second stepper homes using the average price paid for a home, less the amount the purchaser has been able to put down for a deposit – and then expresses the results as a ratio of annual average earnings. The report shows that in June 2016, second steppers required 6.5 times their earnings in order to move up the property ladder – compared to 7.3 times in 2011.
Lloyds also found that the average price paid by second steppers over the past five years has grown from £206,997 in 2011 to £261,550 in June 2016, an increase of 38% or £78,609. This is perhaps one reason why homemovers are choosing to take lengthier mortgage terms. For the first six months in 2011, 9% of homemovers took a 25 to 35 year mortgage. For the first six months of 2016, this figure doubled to 18%. At the same time, the number of borrowers taking shorter mortgages of 20 to 25 years was reduced from 36 down to 29 per cent.
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