Mortgage Rates in Jersey: The Hidden Cost of Attracting Inward Investment

As a homeowner in Jersey, have you ever wondered why your mortgage rates are higher than those in the UK? The answer lies in the Island’s banking policy, which prioritizes attracting inward investment over affordable home ownership.

The Jersey Consumer Council (JCC) recently investigated the disparity in mortgage rates between Jersey and the UK, and their findings are eye-opening. It appears that local banks offer higher savings rates to attract inward investment, which in turn drives up the cost of borrowing for Islanders.

The Jersey Premium

Consumer experts have long warned of a “Jersey premium” of around 1% more on mortgages compared to UK homeowners. This may not seem like a lot, but it adds hundreds of pounds to monthly repayments. For a £100,000 mortgage, this could mean paying an extra £10,000 to £20,000 over the lifetime of the loan.

The Investigation

The JCC wrote to the six main mortgage providers in Jersey, requesting a detailed explanation for the elevated rates. While all lenders, except Lloyds, replied and cooperated with the investigation, the JCC’s chair, Carl Walker, praised their transparency and willingness to work together to help Islanders understand the industry.

The Cause of Higher Mortgage Rates

The JCC’s investigation revealed that the higher savings rates offered by local banks are a significant contributory factor to the higher mortgage rates. By attracting inward investment, the banks need to recoup their costs, which results in higher borrowing costs for consumers.

The Solution

The JCC recommends that mortgage providers increase transparency on why their rates are higher than the UK’s. They also suggest educating consumers about the financial mechanisms affecting mortgage rates and developing a balanced approach to setting savings rates that attract investment without disproportionately affecting mortgage affordability.

The government should consider conducting a thorough review to determine the priority between attracting inward investment and maintaining affordable home ownership. Encouraging more competition in the banking sector could also help drive down mortgage rates.

The finance sector in Jersey

In conclusion, the higher mortgage rates in Jersey are a direct result of the Island’s banking policy. While attracting inward investment is essential for the Island’s economy, it’s crucial to strike a balance between investment and affordable home ownership. As a homeowner in Jersey, it’s essential to understand the mechanisms driving up your mortgage rates and to demand more transparency from your lender.

Mortgage rates in Jersey