Is remortgaging the answer for 'second steppers'?
Remortgaging could be the answer for 'second stepper' home-owners who can't afford to move, but need a larger home. Second steppers are those people still living in their first home but looking to take their next step up the property ladder.
According to the new Lloyds TSB Homemovers Review, home affordability for second steppers is at its least favourable level for over a quarter of a century. The deterioration in affordability for second steppers over recent years has been driven by the decline in their level of equity as a consequence of the drop in house prices since 2007.
Lloyds TSB research found that first-time buyers tend to stay in their first home for an average of four years. This means that potential second steppers in 2012 would have bought their first home at the peak of the market in 2007. Some second steppers who find that they need more space but cannot afford to move, are considering remortgaging to free up money for home improvements to create more space.
Suren Thiru, housing economist at Lloyds TSB, commented: "The issue of second stepper affordability is a key one in trying get the housing market moving again with the current difficulties in this segment of the market restricting the supply of starter properties for first time buyers as well as preventing many of those who need to move from doing so."
By remortgaging, second stepper home-owners with limited space, can release money to extend their property and increase its value in the process.
