The cut to stamp duty for first-time buyers was announced by Chancellor Philip Hammond in his Autumn Budget, and it seems to have had the desired effect among would-be buyers – research shows that millennials are now far more confident in their ability to buy a home, and the Prime Minister has even boasted about the success of the policy. So, will you be taking advantage?
The research, conducted by Foresters Friendly Society, shows that 58% of millennials who are saving for a deposit are now 'more confident' in their ability to buy, with 17% of this age group being 'much more confident'. This perhaps highlights the success of the policy, and follows hot on the heels of comments by Theresa May, who only yesterday said that 16,000 first-time buyers have already benefited from the stamp duty cut.
Given that the cut could result in savings of up to £5,000, it's little wonder that so many would-be borrowers are confident. After all, it means that they'll have to save a little less and could even result in them being able to get on the ladder sooner, and for those who have already factored the stamp duty cost into their savings goal, it could mean more to put towards a deposit and that all-important first-time buyer mortgage.
Happily, interest rates are still low – despite the recent base rate rise – so many will be able to benefit from affordable first-time buyer mortgage rates as well, only adding to the potential bonus. Yet despite this improved outlook, few savers appear to be taking advantage of additional Government measures to help them reach their goals – specifically, the Lifetime ISA (LISA), an account designed with the needs of younger savers in mind.
The study went on to reveal that 75% of millennials surveyed have heard of the Lifetime ISA, yet just 11% have such an account, despite 33% viewing a house deposit as one of their savings priorities. Instead, 43% are using traditional savings accounts, 27% cash ISAs and 24% current accounts, and in doing so are missing out on a whopping 25% Government bonus.
You can find out more about the LISA here, but in a nutshell, you'll be able to save up to £4,000 each year and will get a 25% top-up, equating to a potential £1,000 in tax-free cash each year from the Government. You're only allowed penalty-free access to your funds if you use the money for a house deposit or your pension, so if you're saving for the former, it could be a great way to reach your goal of homeownership, particularly when combined with the stamp duty break.
"As young people continue to strive to get on the housing ladder, it's hugely important that they use the most suitable products to help them achieve their savings goals," said Paul Osborn at Foresters Friendly Society.
"While it's encouraging that three-quarters of those under 40 are aware of the Lifetime ISA, it is evident that more work needs to be done to help them understand the role that it can play in their long-term savings plan. The [LISA's] 25% government bonus offers significant savings support at a time when inflation continues to outstrip wage growth and is putting pressure on people's savings."
If you're a first-time buyer who's between the ages of 18 and 39, find out more about the Lifetime ISA and see if you can benefit. Either way, make a beeline for our Best Buys or mortgage calculator to find the best first-time buyer mortgage rates and boost your confidence levels even more!
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