Sales director Lynnette St Quintin said: “The new Help to Buy ISA saving scheme, which launches on 1 December, helps first time buyers save up a deposit with the government giving them additional top-up sums”.
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Halifax is offering a Help to Buy Isa with a rate of 4 per cent, available to first-time buyers over the age of 16 from tomorrow (1 December).
Mr Lewis suggested two reasons behind the favourable rates being offered by providers. If you choose not to buy a home you can still take the money, but you won’t get the 25 per cent bonus.
If prices rise over the next five years at the same rate they have in the last five, homes in most of the South East and southern England will be beyond the Government price caps.
Santander will pay a preferential rate of 2% to 123 World and Select customers, and a 1.5% rate to all other customers.
Another advantage of Nationwide’s deal is that it will also allow Help to Buy Isa savers to spread their Isa balance across more than one Isa product with the Society, enabling them to save up to the full annual tax year Isa limit of £15,240.
Charlotte Nelson, of financial information service Moneyfacts, said: “It looks like the competition is now on to entice these new savers and to be seen as the first-time buyers’ choice”.
You can start one of the tax-free savings schemes with £1,000 and then save £200 a month towards a deposit and eventually earn a government bonus of 25 per cent of the amount you save, up to a maximum £3,000.
HSBC, Barclays and Santander are expected to released products in due course.
‘With ever increasing house prices, the Help to Buy ISA will not suffice, particularly for single aspiring homeowners’.
Using land registry data for the past five years to reflect property trends, TotallyMoney.com forecasted the affordability of property for first-time buyers saving with the Help to Buy ISA. The results have been mapped for single people and couples and an interactive widget reveals whether those saving with a Help to Buy ISA will really be able to purchase a property.
The property must be in the United Kingdom, and cost up to £250,000, or up to £450,000 for people buying in London.
Under the government scheme, deposits are limited to £200 a month, except for the month of opening, when customers can fund the account with an extra £1,000. It must not be bought as a buy-to-let property.
So far, 14 banks and building societies have signed up to offer a Help to Buy Isa. There’s a good range of options for savers, with different interest rates, upselling deals and cashback offers on the table.
The programme was announced in Chancellor George Osborne’s March budget.
But experts have warned that the drive must not leave those who are not home owners without somewhere affordable to rent.
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Campbell Robb, Shelter’s chief executive, has said that a “key test” for the measures will be whether they will work for people on average and lower incomes.
