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Trading Lessons

First-time Buyers Finding Help to Buy ISAs Less Helpful

Housing-Market / Mortgages May 23, 2017 - 04:32 PM GMT

By: MoneyFacts

Housing-Market

Whilst figures from the Office for National Statistics show that house price rises have slowed recently, those looking to get on the first rung of the housing ladder are still faced with the daunting task of gathering together a substantial deposit. With the latest research from moneyfacts.co.uk showing that the top-paying rates on the Government-backed Help to Buy ISA have been slashed by a whopping 1.73% since its launch in 2015, first-time buyers are likely to find it even more difficult to save.


Charlotte Nelson, Finance Expert at moneyfacts.co.uk, said:

“This savings product was never just about the rate, with the Government boost an important incentive. It is still terrible news that something that was designed to help people save towards a house deposit has seen interest rates cut so severely. For example, savers who have managed to put £1,200 in the top-paying Help to Buy ISA today would be £20.76 worse off than those who invested the same amount in the top-paying account back in December 2015.

“Worse still, the Help to Buy ISA’s replacement, the Lifetime ISA (LISA), has failed to take off in the Cash ISA market, with all of the current limited offerings requiring investment in the stock market. A stocks and shares option may a great choice for those looking to use the LISA as a part of their pension, where they may be more willing to take risks. Savers who are aiming to use the pot for a house deposit, however, are less likely to want to take those risks with their capital.

“With the average age of a first-time buyer increasing and the LISA’s maximum age of 39, many savers who a looking to buy their first property feel like they have been cast aside, left to contend with the even lower rates in the standard savings market.

“It will always seem daunting trying to save for a deposit, but with more 5% mortgage products on the market it is definitely achievable. That said, those able to stretch to a 10% deposit could find the deals on the market significantly cheaper.

“Those struggling to build their deposit will have to play the savings game to ensure they maximise their interest, not just by opting for a Help to Buy ISA or a LISA to get the Government bonus on offer, but also by looking to local building societies for a mortgage saver that can give them access to benefits when the time comes. They may further want to consider either a high interest current account or a regular saver, both of which pay some of the highest rates on the market.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


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