Individuals have deposited £123 million of savings into the new Lifetime Cash ISA (LISA) since its introduction eight months ago, according to the only provider of the savings vehicle.
Skipton Building Society, the only bank or building society to launch the cash version of the LISA, said 65,000 customers have so far opened an account.
Any money deposited into a LISA will receive a 25 per cent Government top up. The maximum deposit is £4,000 per year.
However, the ISA can only be used by first-time buyers to fund a deposit for a property, or taken tax-free after the saver turns 60.
Savers who withdraw cash for any other purpose will be subject to a 25 per cent penalty – leaving them with less money than they initially deposited.
Most major banks and building societies snubbed the LISA on launch, claiming the Government had not offered enough advice and support to consumers with risks that the account could be mis-sold.
Kris Brewster, head of products at Skipton Building Society, said: “If the £123m were put towards a 5 per cent deposit, that could buy £2.6bn worth of housing.
“65,000 people is the size of a large town. We’re delighted to be able to help this many people and we’re a little surprised to be the only cash LISA provider.
“There is an element of timing as we had the IT capability to launch the LISA. We haven’t got a H2B ISA – this market was saturated and when the LISA was unveiled in the Budget, given it was a scheme to help first-time buyers, that was right up our street as a building society.”
Just three providers – Hargreaves Lansdown, Nutmeg, and The Share Centre – currently offer the stocks and shares version of the LISA.