The Intermediary – August 2025 - Flipbook - Page 8
RESIDENTIAL
Opinion
Reliance on LISAs
shows buyers need
our help
O
ur recent survey of
savers generated
a host of insights
for anyone with
an interest in the
housing market.
Perhaps what shone through most
was just how important the Lifetime
ISA (LISA) is to potential homebuyers.
Almost all LISA-holders we spoke with
– a whopping 98% – said they were
reliant to some degree on the cash
bonus that comes with the accounts in
order to purchase a home. Almost half
said they were ‘very reliant’ on the 25%
bonus of up to £1,000 paid each year.
That’s an enormous proportion of
aspiring homeowners who are playing
their part, in terms of puing money
aside where possible, but who remain
aware that without a helping hand
from the Government, their saving
efforts may be frustrated by persistent
house price growth.
While recent weeks have seen
plenty of speculation about ISA
limits being scaled back, savers are
calling for it to be made more, not
less, generous.
Almost half of those we spoke to
wanted to see the annual limit for
Lifetime ISAs, which currently stands
at £4,000, to be increased.
There was similar appetite for the
25% redemption charge – which is
levied on Lifetime ISAs if they are
used for purposes other than property
purchase or for retirement – to be
lowered or removed entirely.
Fit for purpose
Earlier this year, the Treasury
Select Commiee announced an
investigation into the Lifetime ISA,
questioning whether it was fit for
purpose in its current form.
It noted the frequent complaints
about the level of penalty fees being
6
The Intermediary | August 2025
CHRIS STOREY
is chief commercial officer
at Atom bank
levied on savers, as well as the fact that
the rules around the products have not
been updated since 2017.
These products can only be put
towards purchases of properties
costing less than £450,000, and
given the house price growth we
have seen in recent years, that
means buyers are being frozen out
of using their Lifetime ISA savings
towards purchasing in certain areas,
particularly in the South East.
Our research shows the Lifetime ISA
is playing a big role in the purchasing
plans of would-be buyers. But it could
play an even more impactful role if
it was brought up to date, with more
generous caps in place.
The deposit difficulty
While it would be welcome for
the Lifetime ISA to be updated and
improved, as an industry we also need
to consider other ways to support
would-be buyers who have struggled to
save a mammoth deposit.
High loan-to-value (LTV) lending
is obviously a good place to start,
providing borrowers with more
options at 95% LTV or higher. The
situation here has greatly improved
of late, with data from Moneyfacts
showing that in July there were
around 447 products available at 95%
LTV, compared with 361 a year ago
and just 188 the year before. There
have been similarly encouraging
improvements in the number of 90%
LTV products on the market, too.
While these products will always
be in the minority compared to
those open to borrowers with larger
deposits, any measures which make it
easier for lenders to provide high LTV
mortgages should be welcomed.
That’s why the new, permanent
Mortgage Guarantee Scheme
announced by the Government is
Measures which
make it easier for
lenders to provide high
LTV mortgages should
be welcomed”
such a positive – and will hopefully
result in more substantial options for
aspiring homeowners.
The changes made to the high
loan-to-income (LTI) caps should also
prompt lenders to go a lile further in
providing funding which will truly
make a difference to those potential
first-time buyers.
Regulators and the Government
are removing those potential barriers
and hurdles which may have caused
some lenders to be a lile more
cautious about providing more
generous funding.
The onus is now on lenders to step
up and respond.
Clearing the path
The path to homeownership isn’t an
easy one currently. Aspiring buyers
need all the help they can get, and not
just from the Government. Lenders
must be serious about providing true
support, and that means higher LTVs,
a more flexible approach to LTI, and
catering for those who may have the
odd black mark in their credit history.
Focusing on family support and the
‘Bank of Mum and Dad’ risks freezing
out whole swathes of younger people
from homeownership. Lenders must
step up and deliver the support that
buyers so desperately need. ●
