Hundreds of thousands of second time buyers in the UK trapped unable to move | Europe | News

Hundreds of thousands of second time buyers in the UK trapped unable to move | Europe | News

Up to 360,000 first time buyers who bought a property in the UK in 2007 are likely to be trapped in their first homes, according to new research from HSBC.

First time buyer house prices have fallen 7% on average over this period, eroding the equity these first time buyers have in their homes and meaning taking the next step up the ladder is near impossible for those who have not been saving.

A typical first time buyer who bought in 2007 with a 10% deposit would have started with £16,000 equity. However much of this will have been eroded by the £11,000 fall in their property value, meaning just £5,000 of their original deposit remains. Assuming they have been making capital repayments on the mortgage for the past four years, these first time buyers would now have paid £11,000 off the loan, so would currently have £16,000 equity in their property, almost exactly the same as when they started.

However, the analysis shows that to move up the ladder and buy the average UK home, these second time buyers need to raise £27,000 to cover the cost of selling their first home, raising a 10% deposit on the new home and pay for stamp duty. With just £16,000 in equity this is a shortfall of £11,000.