Millennial Confidence Boosted by Stamp Duty Cut

Around three in five (58%) millennials currently saving for a home deposit are more confident in their ability to purchase their own home following the Chancellor’s Stamp Duty cut at the end of last year, according to the latest sentiment study from Foresters Friendly Society.

Back in the Autumn Budget in November, Chancellor Philip Hammond cut Stamp Duty for first time buyers on property’s worth up to £300,000. Those buying homes worth up to £500,000 will not have to pay Stamp Duty on the first £500,000 – this is to help those purchasing in more expensive parts of the country, such as London.

Following the announcement, the research shows that around one in seven (17%) millennials are much more confident in their ability to achieve their goal.

The Lifetime ISA was developed to specifically help those under 40-years-old in their long-term savings. And, while there is now strong awareness of the Lifetime ISA amongst this age group – with three quarters (75%) having heard of it – too few have chosen to take advantage of its benefits. Take-up sits at just 11% of those eligible, and this figure remains the same amongst the third of respondents (33%) of who view a home deposit as one of their current savings priorities.

The data clearly shows a lack of understanding amongst younger savers about the best way to save at their stage in life, with many preferring options that offer limited risk, but also weaker returns. Low down on the list of preferable savings vehicles are those options that are best suited to early saving, such as the Lifetime ISA (9%), and stocks and shares (5%). Those that are saving for a home deposit are instead opting for savings accounts (43%), cash ISAs (27%) and current accounts (24%) as their preferred methods of saving.

Paul Osborn, the Chief Executive of Foresters Friendly Society, comments: “As young people continue to strive to get on the housing ladder, it’s hugely important that they use the most suitable products to help them achieve their savings goals. While economic uncertainty tends to push people towards options deemed as lower risk, doing so can mean forfeiting much needed returns and makes the effort of saving for a house deposit feel even more of a struggle.

“While it’s encouraging that three quarters of those under 40 are aware of the Lifetime ISA, it is evident that more work needs to be done to help them understand the role that it can play in their long-term savings plan. The 25% Government bonus offers significant savings support at a time when inflation continues to outstrip wage growth and is putting pressure on people’s savings.”