Only cash Lifetime ISA provider nets £123m of deposits in under a year
The mutual remains the only provider to offer a cash version of the Lifetime ISA – the government’s first-time buyer come retirement savings scheme.
Skipton launched the product in June 2017, offering 0.5% on deposits, which are also eligible for a 25% government bonus (maximum £1,000 a year). But, following the Bank of England Base rate late last year, the interest rate has risen to 0.75%.
To date, there are a number of investment platforms offering a stocks and shares Lifetime ISA (LISA) but with initial government expectation that 200,000 would be opened in the 2018/19 tax year, Skipton’s amassed a third of the accounts.
As such, there have been over £123m worth of deposits (including Help to Buy ISA transfers to the LISA, though it’s expecting up to 9,000 more accounts to be transferred), and Skipton’s expecting £30m in government bonuses in May this year.
According to Kris Brewster, head of products at Skipton Building Society, “If the £123m were put towards a 5% deposit, that could buy £2.6bn worth of housing”.
Brewster, added: “65,000 people is the size of a large town. We’re delighted to be able to help this many people and we’re a little surprised to be the only cash LISA provider.
“There is an element of timing as we had the IT capability to launch the LISA. We haven’t got a H2B ISA – this market was saturated and when the LISA was unveiled in the Budget, given it was a scheme to help first-time buyers, that was right up our street as a building society.”
Analysis of the numbers revealed that 72% of its LISA savers are saving for a home – 13% for retirement, and 15% for both and Brewster admits that the focus is on property rather than pensions as cash may not be appropriate for long-term retirement income savings.
The average cash LISA owner is aged 26, helping knock off a few years from the early 30s UK average. But Skipton revealed that 1,236 18-year-olds have opened the products.
Savers have an average of £1,609 deposited and more than two thirds live in London and the South East. The split between male and female savers is roughly 50/50.