Mortgage Rates in Jersey: A Tale of Two Markets

Higher mortgage interest rates in Jersey have been a topic of concern for residents, with many wondering why they’re paying more than their UK counterparts. The Jersey Consumer Council decided to investigate, writing to lenders in March to justify the higher cost of borrowing. Six lenders responded, citing separate operations, different risk levels, and higher operating costs as reasons for the disparity.

The Real Reason Behind Higher Mortgage Rates

But Carl Walker from the JCC hints at another factor: the attractive savings rates offered in Jersey to lure non-residents. “The more the banks attempt to attract inward investment by offering better savings rates than those on offer in the UK, the higher the lending costs need to be in order to cover the interest paid on savings and make profit for the bank,” he explains. While these elevated savings rates benefit the island’s financial sector, they impose higher borrowing costs on locals.

The Jersey financial sector

The Impact on Islanders

The Bank of England’s 14 consecutive rate hikes since December 2021 have highlighted the differences in products offered by UK lenders. Even the smallest percentage difference means massive extra costs for islanders, with some differences resulting in an extra £10,000 to £20,000 being paid on every £100,000 borrowed across the lifetime of a mortgage.

Mortgage repayment calculator

The JCC’s Recommendations

The JCC has made several recommendations to address the issue, including reviewing the priority between inward investment and affordable home ownership. They suggest exploring measures to attract more mortgage providers to the island, setting a cap on the maximum difference between investment and lending rates, and reviewing regulation and red tape that could result in lower local mortgage rates.

Jersey’s housing market

Treasury Minister Deputy Elaine Millar responded to the review’s findings, stating that the government ‘may look to discuss its contents.. in due course.’ The JCC will continue to pressure banks to offer competitive mortgage products and monitor the availability closely.

Carl Walker emphasizes the importance of making home-owning more affordable for everyone, especially the younger generation. The JCC will keep pushing for change to close the gap between mortgage rates in Jersey and the UK.

Jersey residents