Second time buyers tapping the bank of mum and dad

Graham_Devon

Not often you get a story about how the increasing costs of property make it harder to trade up.

Suggests 16% of people would consider approaching their parents for help to trade up to their second property.

‘Parents have long been helping to fund their children’s first home but many are now having to provide further support as they move up the ladder.’

Cost of moving is now "about" £9,000 alone. That's a years rent JUST in fees / Stamp Duty!

http://www.dailymail.co.uk/news/article-2156570/Now-second-time-buyers-face-huge-mortgage-leap-cost-trading-rises-fold.html#ixzz1xHSm9o6H

System

Do you not have it backwards? Sounds like the fall in prices of FTB properties is what's making it harder to trade up. Once the equity goes so does the deposit.

paulmapp8306

Yeh. The equity you SHOULD have in your first home (before considering moving) is what covers the depoit on the new home. If you dony have that covered, its basically not a second home (from a moving up the ladder perspective) - its another first one.

Fees are the same for first or second buys so????

Itismehonest

Yes, the outcome is that all that's happening is the same group of properties are changing hands between FTB & BTL & most of the market doesn't move.

Before anyone says all the chain should drop prices, that isn't the real answer either. If you follow that theory through to its' logical conclusion, & those at the top end dropped their prices low enough for those at the bottom to afford, all the FTB would buy the big, bargain properties & the vast majority of more modest homes would be unsellable.
The whole chain needs to be able to move for the 'ladder' to work properly.

shortchanged_2

The unfortunate result of a boom in house prices from the previous decade.

I bet many wish the property market was kept in check now and hadn't got carried away like it did in the first place.

Itismehonest

shortchanged wrote: »

The unfortunate result of a boom in house prices from the previous decade.

I bet many wish the property market was kept in check now and hadn't got carried away like it did in the first place.

Yes & no.
There have always been different levels of property from the smallest room to the largest mansion. That has always been reflected in the cost to build & price to buy.

Thrugelmir

The art of saving has been lost. For many years people could just borrow more. With a larger and larger mortgage to bridge the gap. Rather than having to target their disposable income to increase the equity in their current property.

michaels

Call me strange but surely most people buy property one late 20s/early 30s and then say 7 years later with a couple of kids want property 2 but luckily by then they have 2 incomes both of which have seen increases due to promotion as well as real wage increases and thus can afford said larger property without ending up with a higher salary multiple.

However as noted above, higher prices imply a larger deposit requirement all things being equal and of course all things are not equal as lenders have also increased the deposit proportion, thus moves up that were possible before now require an extra equity injection.

grizzly1911

Possibly bank of mum and dad realise there is less and less a point having excess savings into old age and are willing to provide for their offspring now, whilst they can see the pleasure?

HAMISH_MCTAVISH

michaels wrote: »

lenders have also increased the deposit proportion, thus moves up that were possible before now require an extra equity injection.

Exactly right.

2TB are caught between a rock and a hard place.

The value of the typical first time buyer house has fallen further than the value of typical second time buyer houses, meaning the crash has actually widened the gap between rungs.

Making it harder to trade up, not easier.

And of course larger mortgage deposit requirements make the situation worse.

Thrugelmir

michaels wrote: »

by then they have 2 incomes both of which have seen increases due to promotion as well as real wage increases and thus can afford said larger property without ending up with a higher salary multiple.

Real wages aren't increasing for the majority. What rises if any are being eaten up by increased costs. Particularly energy at the current time.

Public sector is undergoing a real cut in income at the moment. Which will be compounded by increased pension scheme contributions.