This year is likely to be the worst ever year for the scheme, with the number of purchases with Help to Buy ISAs expected to be down around 60% from the peak in 2021.
Since the scheme closed to new entrants in 2019 it was expected that purchases using the Help to Buy ISA would fall in number.
At the same time, interest rates have become less attractive as the product enters its final few years.
Sarah Coles, head of personal finance at Hargreaves Lansdown, explained: “If you have one of these ISAs, you may still be able to use it, but it’s increasingly unfit for purpose, so it’s worth checking if you’ll be better off elsewhere.
“It has been almost five years since the Help to Buy ISA closed to new entrants, and although bonuses can be claimed until 2030, the number of people in the scheme is dwindling. The fact it’s a closed market means these ISAs are dying on their feet.”
“Providers aren’t particularly interested in attracting your cash, so over time will cut the rates.”
What is a Help to Buy ISA?
The Help to Buy ISA opened in December 2015 and closed to new entrants in November 2019.
The scheme enables people saving for their first home to receive a 25% boost to their savings from the government when they buy a property of £250,000 or less (with a higher price limit of £450,000 in London). This means that for every £200 saved, first-time buyers can receive a government bonus of £50. The maximum government bonus is £3,000.
Despite the scheme closing to new accounts on 30 November 2019, exising account holders can continue saving into their account until 30 November 2029 and claim their bonus until 1 December 2030.
Since the launch of the Help to Buy ISA, 612,426 property completions have been supported by the scheme and 795,759 bonuses have been paid (totalling £1.0 billion), with an average bonus value of £1,291.
The average value of a property bought through the Help to Buy ISA is £178,220, compared to an average first-time buyer property price of £241,502 and an average property price of £288,000.
