Homeowners 'also finding it difficult' to move
It may not only be first-time buyers (FTBs) who are finding conditions difficult in the current housing market, but existing homeowners who are looking to place belongings in self storage and trade up could also be struggling.
This is according to the Council for Mortgage Lenders, which stated this group has been affected by declining income and consumer confidence, reduced levels of equity and higher transaction costs.
Chief executive at the organisation Bob Pannell noted people who are still paying off their mortgage - who account for nearly 60 per cent of owner-occupiers - have been affected by many of the same issues that are impacting activity among first-time buyers.
"Most households have experienced only modest earnings growth over the past few years and will have seen their real incomes shrink as a result of inflationary pressures," he said, which results in individuals being less willing and able to make large purchases.
As movers tend to buy more expensive properties than those who are looking to get on the housing ladder for the first time, Mr Pannell explained they are often required to provide a higher percentage of their gross income as a deposit.
Whereas FTBs are typically asked for deposits of around 80 per cent of their average pay, movers could be required to put up as much as 130 per cent of their annual earnings upfront.
While proceeds from the sale of their existing home remain a key source of finance for this group, around 40 per cent of funding comes from savings, which may be affected in a climate were incomes are squeezed.
Mr Pannell concluded that "although movers appear to be less susceptible to more restrictive lending conditions, in some cases the reverse is true", adding weakness in house prices and the impact this has of capital gains may be restricting people's ability to fund a move.
Elsewhere, editor at What Mortgage Ben Wilkie has suggested long-term fixed-rate deals will become more popular in 2012 as people look for the extra level of security these can provide.
Posted on Thursday, 02 February 2012 under ContentPlus Self Storage
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Homeowners 'also finding it difficult' to move
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