A savings account extension to the Help to Buy scheme is proving immensely successful with first-time homebuyers, with one account being opened around every 30 seconds.
Yesterday, Chancellor George Osborne announced that 250,000 Help to Buy Isas had been opened since their launch on the 1 December, which The Guardian says "equates to roughly 3,000 every day". Around three quarters were opened by savers under the age of 30, bolstering government claims that the scheme especially helps younger buyers.
The accounts offer a 25 per cent government bonus towards a house deposit for first-time buyers who have saved at least £1,600. They can be opened with £1,000 and savers can contribute a regular premium of up to £200 a month. In addition to the bonus, the savers are enjoying impressive interest rates - most of the offering banks are so keen for the business they are paying up to four per cent.
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While this explains the Isa's popularity, it has not prevented ongoing criticism that the accounts actually reduce the chances of owning a house for those with small deposits by stoking demand and contributing to rampant price inflation.
"With house prices soaring by almost £20,000 in the last year alone, this is nothing more than a drop in the ocean," said Campbell Robb, the chief executive of Shelter, the housing charity.
Whatever the wider influence of the scheme, a number of buyers have already started to cash in their bonuses to contribute towards a deposit on their first home. For those who opened their account as soon as they launched and have contributed the maximum amount, this week their accounts would have hit the magical £1,600 mark to trigger the minimum £400 government payment.
The Daily Mail says more than 40 first-time buyers saving with an Isa through Nationwide "have already closed their accounts in order to cash in on the government bonus". One buyer was reportedly able to claim £1,750 in total, including cashback payments promised on the account by the building society.
