At last, a move in the

THE Help to Buy Isa, aimed at aspiring first-time buyers, will launch this Tuesday. Hip hip hooray (yes, written with a little bit of irony).

It is a key plank in the Treasury’s strategy, outlined in last week’s Autumn Statement, to reignite the country’s love for home ownership, much subdued as of late by rising prices – especially in the South East – and stricter lending criteria.

The new initiative will be a slow-burn, but it has some merit. First-time buyers will be able to amass a deposit war chest – two of them if buying with a partner – without worrying about nasty tax issues. Good. And, provided they go on to use the money saved towards the purchase of a first home, they will receive on top a nice little 25 per cent bonus from George Osborne’s war chest, capped at £3,000 per Isa saver. Another good.

Although the monthly contribution is restricted to £200, savers can kick-start their plans with an initial £1,200 payment in the first month. They can use the account – plus bonus – to help fund a home purchase once £1,600 has been squirrelled away. All in all, it is a half attractive package although it does not provide an instant or complete solution for those looking to buy a first home. The deposit currently required by the average firsttime buyer is around £36,000 so most will need more than a Help to Buy Isa to turn home buying dreams into reality.

Also, on the bad side, it does seem unfair that the maximum monthly contribution is so low at £200. Even worse is the fact that not all Help to Buy Isa savers

will be allowed to contribute to a cash Isa, with its more generous £15,240 annual allowance (Nationwide Building Society and NatWest savers are exceptions).

Thankfully, if early indications are anything to go by, providers of Help to Buy Isas are going to do their bit to make this new home-buying incentive as appealing as possible.

Halifax, part of Lloyds Banking Group, has come in with a barnstorming four per cent interest rate – variable – on its Help to Buy Isa. To put this rate into perspective, equivalent bestbuy cash Isas are paying between 1.5 per cent and 1.6 per cent.

In terms of rates, Nationwide’s offering pales against Halifax’s. It is paying a mere two per cent – although still more than is available from mainstream cash Isas. But Nationwide is offering more besides. It will provide cashback of up to £1,750 for those who go on to fund a home purchase with one of its mortgages. NatWest is also paying 2 per cent.

My cynical side is telling me that Halifax will not maintain its four per cent rate for long – it will be cut, and will definitely not rise when the Bank base rate moves off its 0.5 per cent floor.

But Ray Boulger, at broker John Charcol, takes a different view. He believes that the likes of Halifax and Nationwide may well maintain these rates in the hope that their Help to Buy savers will become borrowers that they can then profit from for years to come. Only time will tell.