Second cash Lifetime Isa enters market

Second cash Lifetime Isa enters market

The Nottingham Building Society will launch a cash Lifetime Isa next week, in the second addition of its kind to the market.

The product will be available from 28 August, initially exclusively in-branch before expanding to an online version later this year.

The cash Lifetime Isa (Lisa) can be opened with a balance of £10 and offers an interest rate of 1 per cent AER - customers will also have free access to The Nottingham’s whole of market mortgage service.

The only other cash Lisa currently available on the market is offered by Skipton Building Society, also at a rate of 1 per cent.

Simon Taylor, chief operating officer at the building society, said the product was launched in response to the challenges faced by first-time buyers saving for a deposit in a competitive and crowded housing market.

He said: "As part of our unique proposition, we are also the only society who will search the whole of the mortgage market to find our members the right mortgage for them, offering the potential for even greater savings.

"This service will be free to Lisa savers and further demonstrates our focus on supporting first-time buyers looking at the daunting prospect of their first mortgage."

In July, MPs on the Treasury select committee called for the abolition of the Lisa - claiming it was too complex and not popular among savers.

The committee’s report suggested the product’s 'perverse' incentives and inconsistency with the long-term savings landscape had contributed to its limited take-up by customers and providers.

A The Nottingham spokesperson said the society remains an advocate of the Lisa, regardless. They said more than 170,000 Lisa accounts have been opened since the scheme’s launch in 2017.

They said: "The Lisa is a genuinely beneficial savings product and we are investing significant sums and resources to make this available to our members - the launch has been much anticipated and the product has been positively promoted by a number of independent consumer champions.

"As with every savings product, there are terms and conditions but these will be fully explained to members wishing to open one and we are expecting a strong uptake."

Rachel Springall, finance expert at Moneyfacts, said it was good to see The Nottingham finally launch its Lisa after a long wait, even if only via their branch network for the time being.

She said: "What is interesting, is their offer to wave a £249 non-member mortgage service fee, which could entice first-time buyers.

"In offering the same 1 per cent interest return as Skipton BS, it shows that whilst Nottingham is in support of savers, there is no real need to offer a higher rate due to the lack of competition."

But Ms Springall said consumers should think carefully about their suitability to a Lisa, amid concern the account could leave them out of pocket if they choose them over saving in a pension, or make a withdrawal down the line and incur penalties.