First cash Lifetime ISA attracts 15,000+ savers in opening week
Skipton Building Society is the first provider to offer a cash version of the Lifetime ISA (LISA).
The Society officially launched the LISA, which aims to help people buy their first home and save for retirement and which attracts a 25% government bonus, on 8 June.
However, those who had pre-registered their interested in the product were able to open an account earlier on 6 June.
The product pays 0.5% interest on up to £4,000 deposited each year, with a minimum deposit of £1. At the launch, Skipton said a 25-year-old maximising the product’s £4,000 annual allowance for eight years would have an estimated pot of £40,776.53 by the age of 33, an amount higher than the average first-time buyer deposit.
The mutual confirmed more than 15,000 cash LISA accounts were opened between 6 and 14 June, however it wasn’t able to share exact numbers as the information is “commercially sensitive”.
Kris Brewster, head of products at Skipton Building Society, said: “We’re delighted to see a high level of interest in the Cash Lifetime ISA, which could make a real difference to a new generation of savers by assisting them in getting a foot on the property ladder. We are excited to offer a product that will encourage future homeowners to save towards this significant milestone and it seems many people are keen to take this up as a step towards helping them own their own home or save for their future.”
How do the numbers compare?
When the government launched the LISA in April, no banks or building societies offered a cash version of the savings product. Three providers – Hargreaves Lansdown, Nutmeg and The Share Centre – currently offer a stocks and shares investment version. Foresters Friendly Society also launched a With Profits LISA earlier in the month.
The three investment platforms told us the following information about account openings:
- Hargreaves Lansdown: More then 10,000 LISAs were opened in the first two weeks of launch
- Nutmeg: 1,217 accounts were opened on the first day of launch
- The Share Centre: It wasn’t able to share details but said “several hundred” had been opened.
Taking a look at Help to Buy ISA figures – the government’s flagship scheme to help people get on the property ladder – there were 250,000 accounts opened in the first six months since launch. This is the equivalent of one opened every 30 seconds.
The Lifetime ISA need-to-knows
The government launched the LISA in April to help young people save for a house, or for retirement. See YourMoney.com’s Lifetime ISA guide for full details.
People aged 18-39 can open an account and save up to £4,000 each tax year into either a cash or investment version of the product and receive a government bonus of 25% up until the age of 50.
The money must go towards a first home worth under £450,000 or be used when the saver reaches 60 or over towards retirement.
Apart from in the first year, the government will charge an exit penalty of 25% on the entire amount including investment growth if the money is withdrawn and not used for a first home or for retirement.