Gary Salter is head of corporate accounts, Nationwide Group Intermediary Sales
The challenges faced by first-time buyers are rarely out of the headlines as they struggle to save for a deposit and meet the necessary income requirements.
But an equally crucial section of the property ladder is being forgotten. Many of the so-called first-time sellers who eagerly picked up the keys to their first home four or five years ago, are also now in a financially precarious position as they struggle to adopt to today’s dramatically different lending environment.
The frustration for this group of borrowers stems not from anything they have done, but rather how the lending world around them has significantly changed.
Despite working hard to consistently meet their mortgage payments, many first time sellers find themselves prisoners in their own home.
They are ready to move, but the value of their home may have decreased or they may not even qualify for a new loan due to tighter lending criteria. It means they are stuck in the property, unable to change their lives.
Alarming statistics from Nationwide Building Society show that those who bought at the height of the housing market in 2007 would have seen the price of their property drop by £17,000 on average, meaning they could now be in or close to negative equity.
This group of borrowers is also more vulnerable than those further up the property ladder because they have never been through the selling process before.
And the experience of buying and selling simultaneously is a particularly daunting prospect in a fragile property chain.
Add to this the lack of buyers, moving costs and the problems of negative equity, and they are facing an increasingly steep and slippery ladder. It is arguably harder to move up the property ladder than it is to get on it in the first place, resulting in some first time sellers destined to remain on that limiting first rung.
What is clear is that first-time sellers are crucial to a healthy mortgage and housing market. Without this increasingly- threatened species, first-time buyers cannot get the type of property they need, which then has a domino effect on the rest of the chain.
Undoubtedly, the well-being of the rest of the market rests on their inexperienced shoulders.
The property market is based on supply and demand, with a house only being worth what a buyer is willing to pay for it. First-time sellers are the life blood for estate agencies as their properties not only attract first-time buyers, but also ‘empty nesters’ who are downsizing.
So what can we do to help? A recent Nationwide poll asked intermediaries what lenders should be doing to support this group. The top responses included discounting product fees, offering 90% LTV products; offering free valuations and legals, and providing access to NewBuy via all intermediaries.
Nationwide is now offering all of these, demonstrating its ongoing commitment to helping keep the nation moving.
We’ve also got some fantastic impartial online guides, including a sellers guide to learn the ropes and a remortgage guide. It is vital for lenders to support this type of borrower.