Second-steppers struggle to move up property ladder

Much is written about the struggle people face to get onto the property ladder, but those who already have a mortgage are also finding it hard to move up the next rung. 

New research carried out by price comparison site MoneySuperMarket revealed that, overall, 26 per cent of homeowners who want to move house believe it will be difficult to do so, while a further nine per cent admitted they would find it very hard to make the leap. 

The issue seems to get worse the older people get, as 41 per cent of those aged between 35 and 54 said they would struggle to make the leap, while a comparatively low 28 per cent of 18 to 34-year-olds felt moving on to a bigger property would be hard. 

Financial worries are behind most people's reluctance to move 

Nearly half of those questioned (47 per cent) said that high house prices were the reason behind their reluctance to move up the housing ladder, while 43 per cent admitted that they simply cannot afford to move at all. 

On average, homeowners said moving house would cost them £10,459, but that sum increases to £12,946 for those living in London. 

People living in the north-east would pay the least to move, but it is estimated they would still need to stump up £6,772. 

Head of banking at MoneySuperMarkeet Kevin Mountford said: "House prices have rocketed in recent years and tougher borrowing rules have made the search for a mortgage slightly harder." 

Mr Mountford said it is crucial for homeowners to be able to move up the ladder, as if people don't move on, there will be shortage of first homes available. 

He advised so-called second-steppers to avoid becoming complacent and instead come up with a realistic budget for moving house. 

The good news, he said, is that there is currently a lot of competition in the mortgage market and rates have dropped as a result. He suggested that would-be movers should look out for free legal costs and valuations as lenders look to attract clients. 

Consumers should be wary of headline rates, he warned, as it is important for them to look at the overall cost of repayments.  

Anyone choosing a variable rate mortgage should also be careful to ensure they can afford their monthly repayments if interest rates rise, which they will inevitably do at some point. 

Figures suggest mortgage lending is relatively subdued 

Despite Mr Mountford's suggestion that the market is fairly buoyant at the moment, the most recent figures released by the Council of Mortgage Lenders (CML) show lending in April 2015 was weaker compared to a year ago. 

Specifically, there was a decline in lending to first-time buyers compared to March and April 2014. There was also a decline in home-owner remortgage activity. 

Overall, gross lending in April was at £15.8 billion, which was a fall from £16.1 billion in March and £16.8 billion in April 2014. 

Despite these figures, Paul Smee, director general of the CML, suggested that there is room for optimism. 

"The economy is recovering, with employment up, earnings growing, and competitive mortgage rates, so we expect activity to continue building as the year progresses," he stated. 

Mr Smee stated that the biggest area of growth in terms of lending was in the buy-to-let market, which continues to outstrip activity in the home-owner lending sector. 

Recent research by Paragon Mortgages backs this up, with nearly half of intermediaries (45 per cent) stating they expect to undertake more business in the buy-to-let market in the coming year, whilst almost one-quarter of business in the first quarter of this year was buy-to-let.