Help to Buy ISA to shorten saving times
The MAB said that first-time buyers will be able to build up a £9,936 deposit – the average for borrowers taking out a Help to Buy 2 mortgage in February – in just 15 months.
Help to Buy ISA will see the government contribute £50 for every £200 saved by first-time buyers up to £12,000.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Help to Buy’s importance to easing affordability pressures is plain to see: the average deposit of those using the scheme remains far below those found in the wider marketplace, giving first-time buyers access to the housing market in a far shorter timescale than would otherwise be possible without parental help.
“The arrival of the new ISA scheme will be another step towards make homeownership a realistic goal for first-time buyers on average incomes.”
Average Help to Buy 2 deposits were as low as of £7,856 in November 2014, although they reached their highest point in April 2014 at £11,438.
A first-time buyer couple which makes use of the Help to Buy ISA and saves the maximum allowance of £200 each per month could reach the £7,949 target in less than two years (20 months), compared with 25 months if they tried to save the whole £9,936 without government support.
The average HTB2 customer has a salary of £30,185. Someone with this income would need to put aside just 10% of their net monthly salary (£1,967) to make the maximum £200 monthly contribution to the HTB ISA.