Help-to-Buy equity loans have been very successful in giving support to homebuyers struggling with affordability issues, as well as boosting the supply of new homes.
However, equity loans are designed to help at the point of purchase rather than dealing with the issue that so many first-time buyers face in building an adequate deposit.
The development of the HTB Isa, and more latterly the Lifetime Isa, has helped at the front end. Rocketing house prices in recent years has risked many first-time buyers reaching the point of giving up on ever saving enough to buy their own home.
If prices are rising quicker than they can save, it is no wonder that some fear it becoming a futile exercise and too big a mountain to climb.
The introduction of a government boost to savings for those buying their first home gives a genuine incentive to aspiring first-time buyers to get into saving regularly toward their deposit. A 25 per cent bonus on their savings is not to be sniffed at and helps to address the anxiety that rising prices could negate their savings effort.
While the HTB Isa is still in existence, the Lisa looks set to be the ongoing vehicle for first-time buyers. The Lisa bonus is added regularly, rather than at the point of purchase, but that does mean that a penalty will apply if the saver uses funds for something other than their first property purchase or for long-term savings to be used in later life.
One of the question marks around Lisa products has been the prevalence of stocks and shares Isas and lack of options for cash savers.
First-time buyers that are keen to save towards a property purchase that might be on the cards in the nearer term may well prefer the certainty of a cash Isa rather than putting capital at risk.
The Unity Mutual launch – which it claims is “for advisers to offer to younger clients” – brings another Isa option to the market. It is a stocks and shares Lisa but with a capital guarantee and can only help broaden the choice for those getting into the savings habit.
If the Lisa and HTB Isa can help encourage future buyers to start saving sooner, it could help address some of the key issues that so many first-time buyers have faced.
David Hollingworth is associate director, communications at London & Country Mortgages
