Negative equity holds back second-time buyers

- Over a quarter of second-time buyers are finding it hard to move because of negative equity or stagnant house prices
- Just under a third are struggling with costs involved in moving
- One in 12 are relying on financial help from family to fund their move

Over a quarter (28 per cent) of second-time buyers could be stuck on the first rung of the property ladder because they are in negative equity or their home hasn’t increased enough in value for them to buy their second home, according to research from Post Office’s Step-Up report.

John Willcock, Head of Mortgages at Post Office, said: “We are often reminded of first-time buyers’ struggle to get onto the property ladder. However, it’s clear that second-time buyers are finding it difficult too. Stagnant or decreasing property prices in many areas of the country, the high costs involved with moving and lack of available properties on the market have meant too many people are unable to move up the property ladder.

“Relying on the bank of mum and dad is not just the preserve of first-time buyers - second-time buyers are also looking to their parents to fund the move up the ladder. In the years before the financial crisis it was almost guaranteed your property would go up in value enough to move into a second, larger home, but many are finding that their homes just aren’t increasing enough.”

Second-time buyers are also struggling to move because they can’t shift their first property, with just under one in five (17 per cent) stating they can’t find a buyer for their home. Meanwhile, 16 per just can’t find a property they want to buy.

Hardened house hunters are using their past house-buying experience in order to make sure they don’t repeat the same mistakes. A third (33 per cent) of second-time buyers said they would research a new area more thoroughly before they committed to buying. Almost three in 10 (31 per cent) admit they would save more money in order to cover incidental costs which they did not previously anticipate.

What would second-time buyers do differently when buying their second home?

John Willcock continued: “It’s clear many homebuyers have learnt from previous experience. It is absolutely vital to be as prepared as possible when buying a home, whether planning for unexpected costs (which nearly always crop up) or researching the area and speaking to neighbours; putting together to-do list for all aspects of moving and costs involved will help should any nasty surprises arise.

“At Post Office many of our products have no arrangement fee, free standard variation and there’s no higher lending charge, which should give movers a helping hand covering costs as they climb the property ladder.”

Customers can pick up information about Post Office’s mortgage range and rates online at www.postoffice.co.uk/mortgages or from one of over 11,500 Post Offices branches across the UK. Customers can also arrange a call-back from a mortgage specialist at the call centre, via all branches, or call the Post Office directly on 0800 077 8033. To view the terms and conditions for the offer, please visit www.postoffice.co.uk

Research conducted by Opinium in an online survey on behalf of Post Office. 1,024 people were interviewed 25th April to 3rd May 2013. 213 people in the sample are second-time buyers.

The Post Office recently announced its intention to lend £2.5bn to mortgage borrowers and put in place 100 mortgage specialists by the end of the year.

In August 2012 Post Office introduced Mortgage Specialists to four of its larger branches in the UK, and a further three branches in November 2012. The Mortgage Specialists are able to discuss each individual’s needs and answer questions to help customers make an informed decision about the suitability of the products. In addition, the majority of customers will be able to get a decision in principle within minutes. First-time buyers, those wishing to move, or customers looking to switch to a better deal will be able to book a free, no-obligation appointment in selected branches.

Post Office Limited has an unrivalled national network of over 11,500 branches across the UK, more than all the high street banks combined, and sits at the heart of many communities across the country. The Post Office has made a commitment to no more branch closure programmes. It provides around 170 different services and products spanning financial services including savings, insurance, loans, mortgages and credit cards. Post Office also offers Government services; telephony; foreign currency; travel insurance and mail services.

It serves around 20 million customers a week and half of all small businesses. 93% of the total population live within one mile of a post office and 99.7% within three miles. For many rural communities the post office is the only retail outlet. Post offices remain highly valued and trusted and are the focal point for many communities. For more information, visit www.postoffice.co.uk

Post Office mortgages in 2012 have won the following awards from What Mortgage magazine – Best fixed Rate Provider and Best Online Lender for the third year, and recently have also received Best Online Lender from Your Mortgage for the fourth year running.