According to research by AJ Bell, the Lifetime ISA designed to help first-time buyers get on the property ladder is in danger of pricing buyers out of the market in 62 regions.

The wealth platform is urging the government to increase the limit on the price of a property a first-time buyer can use the ISA for from the current level of £450,000, which has remained in place since inception in 2027.

AJ Bell has calculated that to keep up with the increase in house prices, the limit for the Lifetime ISA should now be £575,000. By keeping the limit at £450,000, first-time buyers are at risk of the 25% penalty imposed for withdrawing cash from their Lifetime ISA.

Current rules also mean that if someone has used the ISA to invest in stocks, the government will also pocket 25% of the portfolio’s gains. AJ Bell also suggests that the penalty for withdrawing should be reduced to 20% from 25% to match the monetary value of the bonus provided by the product.

Rules mean that if someone placed £10,000 in the product and received the bonuses but then had to withdraw the cash, they would only be left with £9,375. The system is obviously broken.

It’s abundantly clear that the government needs to rethink rules around the product. The inaction and mismanagement of the product are punishing first-time buyers. If governed appropriately, a Lifetime ISA will support the lifeblood of the UK property market.

The government needs to drastically improve the UK investment landscape and encourage young investors to use products such as the Lifetime ISA, which is an obvious place to start. What the Labour Party does with the Lifetime ISA could be considered a barometer of their competency. It’s an easy fix that will have a big impact.

“It’s vital that Chancellor Rachel Reeves increases the maximum property value that people can buy using money held in a Lifetime ISA,” says Dan Coatsworth, investment analyst at AJ Bell.

“The government has frozen allowances on all types of ISAs until 2030. If the Lifetime ISA’s terms and conditions also remain frozen for another five years, flats in places like Ealing and Merton in outer London and terraced houses further afield in locations such as Winchester and Guildford will be deemed too expensive for first-time buyers to deploy funds from a Lifetime ISA without penalty because they are forecast to exceed the £450,000 limit. Even typical first-time buyer properties in the Cotswolds, South Oxfordshire and parts of Kent are projected to be in the penalty zone over the next five years.”

The FTSE 100 was sharply lower on Thursday as corporate updates from Barclays, Unilever and British American Tobacco disappointed, sending the index deep into the red in early trade.

This week, London’s leading index had shown remarkable resilience as traders contended with Donald Trump’s foreign policies and hot US inflation.

US stocks stuttered yesterday after US CPI came in hotter than expected and poured cold water on interest rates hopes. US CPI rose 3% in the year to January, only slightly higher than the 2.9% forecast by economists. The initial market reaction to such a slightly higher reading demonstrates just how much the market is concerned about the trajectory of US interest rates in 2025.

While the Bank of England and European Central Bank are shaping for a series of rate cuts through 2025, the strength of the US economy and stubbornly high inflation have some economists predicting a US rate hike by the Federal Reserve in 2025.

The perceived diverging paths of the West’s major central banks meant the wobble in US stocks wasn’t felt in the FTSE 100 due to the prospect of the pound remaining weak against the dollar and supporting London’s overseas earners. Indeed, the FTSE 100 hit a record high yesterday.

It was a very different story on Thursday.

Corporate earnings took centre stage and were met with rebuke by the market. Barclays, Unilever and British American Tobacco all posted disappointing earnings updates, and investors took flight.

British American Tobacco shares sank 8% as traditional cigarette volumes fell and growth in new products such as vapes slowed. A £6.2bn hit due to a Canadian lawsuit can also be attributed to the drop in shares.

“British American Tobacco’s full-year results delivered single digit growth in underlying revenue and operating profit to £25.9bn and £11.9bn even as more smokers kick the habit or switch to new categories such as vapes and heated tobacco,” said Derren Nathan, head of equity research, Hargreaves Lansdown

“Traditional combustible volumes fell by 5.2% but BATS managed to offset this through strong pricing and product mix. Revenue from New Categories grew faster at 8.9% but that’s lagging the high-octane rates seen in recent years. It’s going to have to take up more of the slack in years to come too as the noose tightens around cigarette smoking.”

BATS was the FTSE 100’s top faller, serving as a reality check that a company whose products are responsible for millions of premature deaths was rightly seeing slowing demand.

Barclays’ 5% drop was more a case of profit-taking than any major concerns with earnings. Q4 results were largely better than expected, and the investment bank unit had a positive period. The bank also set out plans for £10bn in share buyback love the next two years. Guidance was fairly uninspiring, which may have spurred some to book recent gains.

“The £1bn buyback taps into its strong capital position, and with £10bn expected to be returned to shareholders between 2024 and 2026, there’s enough on offer to keep markets happy,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“The only minor downside was the lack of guidance upgrades, but overall, investors should be pleased, with the immediate price reaction likely a result of the strong run up coming into results.”

Unilever shares tumbled after the CEO said slow growth in 2024 would continue and ‘remain soft in the first half of 2025’. The company said it would push forward with a triple listing of its ice cream in the Netherlands, UK and US, but this wasn;t enough to stop shares sinking 7% on Thursday.

“The market environment for consumer goods companies is tough,” explained Charlie Huggins, Fund Manager at Wealth Club.

“China’s economy is weakening, local competition in emerging markets is fierce and the high level of inflation in recent years means the appeal of private label brands has arguably never been greater. As a result, Unilever is pointing to a slower start to 2025.”

Barclays shares dropped in early trade on Thursday as investors booked recent gains for the bank following the announcement of Q4 and full-year 2024 results.

All in all, there was a lot to like in Barclay’s update. Profit was higher due to increased income and marginally lower costs. Impairments were fairly steady.

Net interest margins, a key indicator of profitability, rose to 4.28% in 2024 from 4.11% in 2023, excluding head office and investment bank activities. Given interest rates were expected to fall last year, the rise in net interest margins was a big win for the bank.

But all of this appears to have been baked into the Barclays share price cake, and the report offers little in the way of positivity about the outlook, and investors took the chance to bank gains, sending the stock down around 4%.

A further £1 billion share buyback and promise of £10 billion in share buybacks by 2027 was welcome news but failed to propel the stock higher. Perhaps investors were hoping for a little more from the bank.

“Early price action for Barclays looks a little harsh after the group set a decent benchmark for the banking sector, closing the year with an impressive final quarter as both its UK and Investment Banking arms delivered,” said HL’s Matt Britzman.

“Credit quality remains solid, with loan loss rates comfortably below target, and while there was a dip in the final quarter, stripping out the higher-risk business from the Tesco deal shows that credit performance actually improved. With more exposure to US consumer trends than most UK peers, stable US card default rates should also be reassuring for investors.”

Barclays’ Investment Bank is a big differentiator for the group when compared to the other FTSE 100 banks, and investors will be pleased to see 28% income growth in the unit during the fourth quarter.

“In Investment Banking, Barclays didn’t disappoint, surpassing profit expectations and seeing growth in fixed income and equities that outpaced even the US giants,” Britzman explained.

There will be a big focus on provisions for motor financing this banking earnings season, with investors quietly confident that the recent interventions by the UK government may result in better outcomes for the banks. Barclays wasn’t one of the most heavily involved banks, but it still made provisions for any potential redress.

“On motor finance, the bank set aside £90m in provisions, and with players like Close Brothers maintaining optimism, there’s growing hope that the impact won’t be as severe as first feared – Lloyds will be the key one to watch and the most exposed from the major UK banks,” Britzman said.

The FTSE 100 traded sideways in a tight range on Wednesday as investors awaited the next major catalyst for equities.

The new US president has dominated trade since his inauguration but has been fairly quiet over the past few days, leaving traders at a loss as to what to expect next.

US economic data due for release on Wednesday could well provide an impetus for a move in equities, but until then, investors are seemingly happy to hold back on taking macro-driven positions.

“There’s an overarching sense of calm in the air, perhaps a little unnerving given the storm of political drama we’ve become accustomed too since Tump took office,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“The FTSE 100 opened flat this morning, and after posting another record high yesterday it’s still riding on a wave of enthusiasm. US inflation data has scope to upset the apple cart later today, but for now at least, it’s robust company earnings that are driving markets forward.”

The latest set of upbeat earnings came from Barratt Redrow, who said they see earnings coming in at the top end of the range as completions rose.

“Housebuilder Barratt is reaping the rewards of a more stable economy and political landscape, with customer demand bouncing back and strong reservations since January,” Britzman explained.

“As a result, Barratt is now targeting the upper end of its profit expectations for the year which, when combined with good execution over the first half, should go down well with investors. Following the acquisition of Redrow, Barratt’s capital plans are in the spotlight, with the company poised to launch a £100mn annual buyback, leveraging improved cash flow and a robust capital position.”

Barratt Redrow shares were 5% at the time of writing.

Prudential was the top riser after it said it was considering selling shares in its Indian ICICI Prudential Asset Management business and would return the cash to investors. Prudential was 6% to the good around midday on Wednesday.