More than 90,000 people have taken out a cash Lifetime Isa at Skipton Building Society since the product’s launch one year ago, making Skipton the most popular provider to offer the wrapper.
The building society says the average amount invested in its Lifetime Isa in the first tax year since launch was £2,759, with 73 per cent of investors opting to save for a home.
Skipton is so far the only provider to offer a cash-only Lifetime Isa, with other firms offering investors the opportunity to put their money in the stocks and shares version.
Market leader Hargreaves Lansdown says around 30,000 people have signed up to a Lifetime ISA, while Nutmeg has around 8,000 customers.
The Lifetime ISA was introduced on 6 April last year and allows anyone younger than 40 to put away up to £4,000 a year until they are 50.
It can be used by first-time buyers to fund a deposit for a property or for retirement and has a tempting 25 per cent bonus.
However, choice is limited, with the big banks and building societies failing to get on board with the scheme.
Shore Financial Planning director Ben Yearsley says the launch of the Lifetime Isa is a savvy move by Skipton, which will potentially have 90,000 mortgage customers in two years’ time.
He says: “Investors planning on buying a house in the near future are more likely to go into cash, not equities, purely from a risk point of view.”
CoreData Research international head Craig Phillips says: “The Lifetime ISA has failed to gain traction, with only a handful of providers offering the product. This could reflect wider consumer disengagement in the ISA which has undergone a series of confusing rebrands and reinventions.”
Phillips says: “Meanwhile, cash ISAs have lost their shine due to low interest rates and the introduction of the personal savings allowance. With Skipton building society’s cash Lisa offering just 0.75 per cent, an investment Lifetime ISA might be a better option for those saving over the long-term.”