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Half a million first-time buyers open Help to Buy ISA since launch

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Written by: Paloma Kubiak
30/06/2016
Over 500,000 first-time buyers have signed up for a Help to Buy ISA since the government’s flagship scheme launched on 1 December 2015.

Help to Buy ISAs give first-time buyers the opportunity to save a deposit for a property, earn tax-free interest and receive a boost to their own coffers from the Treasury.

For every £200 saved into your Help to Buy ISA, the government will top it up by an extra £50. The maximum each account holder can save is £12,000, meaning the government can add up to £3,000 to your savings pot. See YourMoney.com’s complete guide to Help to Buy ISAs.

‘Help to Buy ISA is a no-brainer’

Danny Cox, chartered financial planner at Hargreaves Lansdown said: “The popularity of Help to Buy ISA shows the never ending attraction of bricks and mortar. It also shows that setting the right incentives in a popular market, and engaging with the industry are key to the success of new product initiatives.

“Mortgage providers see H2B ISA as a way of attracting future borrowers and it’s not a surprise to see the best buys offered from the ISA arms of mortgage lenders. Virgin Money being a current best buy offering 3% which is substantially above the best buy standard cash ISA rates (1.3% easy access).

“For the time being, H2B ISA is a no-brainer for those saving toward their first home, even if ultimately their savings are used for a different purpose. However from April 2017, Lifetime ISA will become the savings scheme of choice.”

Government schemes

The government today also released figures showing the full extent of how all of the Help to Buy schemes have helped first-time buyers onto the property ladder, as well as second steppers purchasing new builds. See YourMoney.com’s How can Help to Buy help you? for more information on all the schemes.

Since the launch of the Help to Buy (H2B) equity loan, mortgage guarantee and ISA schemes, over 160,000 government-assisted mortgages have been advanced, with 80% (129,000) going to first-time buyers.

The average price of a property purchased with support from the H2B schemes is £189,795, which is significantly lower than the national average of £292,000.

The highest number of homes completed through both the H2B ISA and mortgage guarantee schemes has been in the North West region.

The equity loan – a scheme for new build properties available to second-steppers – is particularly popular in the South East region.

Over half of H2B completions have been for new build homes. Only 6% have been in London.

Other figures released today  show that more than 1,000 households a month on average have purchased their own home through Right to Buy since the scheme was reinvigorated in 2012 – over 52,500 households in total.

The latest quarterly figures show more than 3,250 people bought under the Right to Buy scheme between January and March 2016.

In total, more than 309,000 households have now been helped to buy a home through government-backed schemes since 2010 – that’s 141 new homeowners a day and around 4,350 a month.

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