NatWest reveals new Isa boasting 2% variable interest rate

NatWest has unveiled details of its new Help to Buy Isa, ahead of the products being launched by banks and building societies next week to give first-time buyers a helping hand onto the property ladder.

Giving a first glimpse of the deals on offer, the bank said its new Isa, which launches on December 1, will pay a variable interest rate of 2%.

More providers are expected to unveil details about what they will offer under the scheme in the coming days.

The Government has previously said that NatWest, along with Barclays, Bank of Scotland, Halifax, Lloyds, Nationwide, Santander, Ulster Bank, Virgin Money, Yorkshire Bank, HSBC, Aldermore, Clydesdale Bank, and Newcastle Building Society have agreed to offer Help to Buy Isas.

The deals mean that from December 1, first-time buyers saving for a deposit will be able to put up to £200 a month in a dedicated Isa that the Government will top up by 25% - meaning a £50 bonus for every £200 saved.

The maximum Government bonus that someone can receive is £3,000. To receive that, they will need to have saved £12,000.

To kick-start their account, first-time buyers can also open their account with a one-off lump sum of up to £1,000 in addition to the monthly £200 maximum deposit.

Couples will also be eligible if they are buying together, meaning a potential boost of up to £6,000 towards a deposit for a first home.

Charlotte Nelson, a spokeswoman for financial website Moneyfacts, said the rate offered by NatWest compares well with cash Isa rates on the market generally.

She said: "Paying 2%, the NatWest Help to Buy Isa is offering a highly competitive rate when compared to other standard deals on the market. For example the average cash Isa rate stands at 1.48% today."

According to Moneyfacts' "best buy" tables, the rate on NatWest's new deal matches some of the top regular saving Isas on offer.

For example, Buckinghamshire Building Society has a regular saving Isa offering a rate of 2% and Nationwide Building Society also has a "save to buy" Isa with a rate of 2%.

To qualify for a Help to Buy Isa, someone must be a UK resident aged 16 or over buying their first property.

The property must be in the UK, and cost up to £250,000, or up to £450,000 for people buying in London. It must not be bought as a buy-to-let property.

Earlier this week, Chancellor George Osborne unveiled a package of measures designed to help people onto the housing ladder.

The Chancellor's measures promise to be the biggest affordable housebuilding programme since the 1970s, with more than 400,000 new homes set to be built across England.

But experts have warned that the drive to "turn Generation Rent into Generation Buy" must not leave those who are not home owners without somewhere affordable to rent.

Campbell Robb, Shelter's chief executive, has said that a "key test" for the measures will be whether they will work for people on average and lower incomes.

Across the UK, house prices reached a new record high of £286,000 on average in September after jumping by 6.1% over the last year, according to recent figures from the Office for National Statistics (ONS).

A first-time buyer faces paying 4.3% more for a starter home than they did a year ago, with the average price paid for a first-time buyer home standing at £216,000 in September, the ONS figures show.

Angela Byrne, head of savings at NatWest, said: "We are very aware of the strains young people in particular put themselves under to save for their first home. With eight out of 10 of our customers relying on help from their parents, this scheme couldn't be more timely."