THE Bank of Mum and Dad is not only having to finance first-time buyers - but young homeowners wanting to move on the next step up the ladder, a report has revealed.
Nearly a fifth of homeowners trying to take their second step on the housing ladder are considering turning to their friends or family to help fund the move, as trading up costs rapidly increase, the latest Lloyds Bank Second Steppers report has found. Financing children moving up the property ladder is the latest cost for parents who have needed to financially support their adult offspring in the wake of the recession.
Many mother and fathers are paying for their children to remain living at home until well into their 20s and even 30s as their offspring struggle to find a job - or help them with the spiralling cost of renting or buying a property.
The report found that first-time movers typically need to find an extra £125,694 to plug the gap between the sale price of their current property and the cost of the house they would ideally move to - most often, a detached property. The gap, however, reduces to £17,370 if the “second stepper” moves to a semi-detached home.
While almost three in four intend to raise the deposit required for their next property purchase from equity in their current home, and over half will raid their savings, some 14 per cent said they were considering returning to family members to help them out – typically asking for £22,480.
This is up from £21,080 in 2014 and £21,273 in 2013.
Half of these second steppers feel that they would not be able to make the next move on the property ladder without this financial assistance.
Andrew Mason, Lloyds Bank mortgages director, said: “Parental support has been playing an important role in helping young people get on the property ladder for decades but this is being stretched further, with many second steppers continuing to be reliant on the Bank of Mum and Dad to help them make the next move.”
The research revealed that almost half had also required help with the deposit on their first property. The average loan size first-time buyers received from family and friends the first time around reached almost £24,000, only slightly more than they are hoping to borrow again from parents or grandparents to take their next step on the housing ladder.
Meanwhile, the research also reveals that the size of the deposit required is still seen as the biggest barrier to moving home.
Of those considering asking for financial support, four in 10 admit that parents have had to make sacrifices to help them get on and move up the ladder, although this has significantly fallen from 70 per cent in 2013.
One in five also said that they will now have children later in life due to the challenges of moving up the housing ladder into a family home. Mr Mason added: “For many, parental support will be reaching its limit, as prices increase, so it’s encouraging to see so many second steppers also standing on their own two feet, planning ahead and taking action to top up their equity levels.”
The research also revealed that almost two-thirds have either continued to save or started to save since they moved into their first property.