The scheme, called Second Steppers, is designed to help borrowers with negative equity move house.
For example, a borrower with a £130,000 mortgage on a property worth £110,000 has a loan to value of 118%. To help them move house, Lloyds will offer a new mortgage of £130,000 on a property worth £120,000 if the borrower can put in £10,000 equity, bringing their LTV down to 108%.
It allows borrowers to move to a property of the same value, buy a bigger home or downsize. Customers can move without increasing their existing levels of borrowing and channel any additional funds in to their new home.
Colin Walsh, managing director, mortgages, Lloyds Banking Group, said: "The challenges facing first time buyers receive a lot of deserved attention but to achieve a sustainable housing market, we have to look at every rung of the ladder. Many borrowers that bought their first home in more recent years have found their equity position hit hard by the period of house price decline.
“It's right that we can continue to help people buy their first home, but we shouldn't underestimate the role second steppers have in making that happen. They're the link between first time buyers and the rest of the market – and at the moment, many are finding it just as tough to make the next move as it was to make their first.”
LBG also published research today showing that first time buyer and second step property sales continue to be in decline, in contrast to the higher rungs where transaction levels are improving.
Property transactions below £120,000 fell by 14% through 2010 and those between £120,000 and £200,000 reduced by 13%. Properties valued above £200,000 experienced stronger sales levels, the number of sales over £500,000 increased by 31%.
Nearly one in five (19%) second steppers does not have enough equity in their current property to move.
