Falling House Prices Keep Homeowners from Moving Up Property Ladder
The lack of first time home buyers coming into the market is not the only thing keeping buyers out of the market, so are falling house prices. As house prices fall so does the equity built up into properties. Without adequate equity there is little chance of a homeowner moving on from their current property.
Research from Lloyds bank reported that a fifth of those currently living in their first homes lack enough equity to make a move. The data of its own mortgage customers showed that 9% of those wanting to upgrade from their first home to a new property were unable to do so due to the fact that equity had been lost in their first home. Many of these homeowners are actually in negative equity. Lloyds remarked: "Without movement from second steppers, movement on the ladder comes to a standstill. "For many, a necessary move to enable them to start a family or re-locate with work is held back by an erosion of equity and a widening gap between the cost of a first-time buyer and second step property," it added. House prices are according to analysts expected to see further decline in the year ahead. Many homeowners have chosen to seek remortgages before prices decline further and equity disappears even more. Remortgages have seen a surge in the past months and as house prices decline more and the threat of a base rate change increases due to rising inflation the more popular remortgage will become according to analysts. Deals on fixed rates have seen the most demand recently.