Research published by the bank revealed that unless 2007’s first-time buyers have made some substantial savings or overpayments on their mortgage, it could be impossible for them to move up the property ladder because of falling house prices.

A typical first-time buyer in 2007 paid an average price of £162,423 on their home, but this has fallen 7% in value since, to £151.061.

First-time buyers who put down a 10% deposit four years ago would have started with £16,000 equity in their home. But the £11,000 fall in property values since then will have left them with just £5,000 of their original deposit.

HSBC said that to move up the ladder, second-time buyers need to raise £27,000 to cover the cost of selling their first home, raising a 10% deposit and paying Stamp Duty. 

Pete Dockar, head of mortgages at HSBC, said: “These findings highlight the need to save or pay down an existing mortgage in order to fund that second step on the property ladder. First-time buyers can no longer rely on rising house prices to provide them with the deposit needed for their second purchase.

Sponsored

Aldermore Insights with Jon Cooper: Edition 10 – The biggest barrier to homeownership isn’t affordability. It’s outdated lending.

Sponsored by Aldermore

“Making overpayments on the mortgage is one way that these movers can help build up their finances to take the next step up the property ladder. This increases the equity in their first home, and bolsters the deposit available to them for their onward move.”