Jersey homeowners may be offered tax breaks if rates rise

Deputy Ian Gorst said if the rates continue to rise the government would look to support islanders "in a very targeted way"

Jersey's treasury minister has said the island's government could offer tax breaks to homeowners if typical mortgage interest rates keep rising.

It is expected the Bank of England base rate will be further increased next month from its current rate of 2.25%.

That may add hundreds of pounds to some islanders' mortgage bills.

One Jersey mortgage broker said some first-time buyers were deciding against getting on the property ladder due to the prospect of rising interest rates.

In September, Jersey's States Assembly agreed a £56m plan to help islanders with rising living costs, but ministers have now said further financial measures could be brought forward if the economic situation worsens.

Asked whether those additional measures could include support for homeowners, Treasury Minister Deputy Ian Gorst said: "We really are actively watching what's happening in the interest rate arena.

"We see what commentators are expecting that mortgage interest rate might rise to - it could be as much as 6% in the beginning of January.

"If we start to see levels of that then I think it's only right that government would support islanders in a very targeted way."

He said one way could be through mortgage interest tax relief, which allows people who have borrowed money, in order to buy or extend Jersey properties, to deduct some interest payments from their gross income.

Jodie Booth, who bought out of her mortgage early to set up a five-year fixed term rate, said you have to pay it or sell the house

The interest cap is currently being reduced by £1,500 a year, and is due to be phased out by 2026.

Extending the scheme until 2027 would limit homeowners' tax bills for longer than is currently planned.

Private tenants might benefit indirectly, as landlords would have fewer costs to pass on.

Amid growing concern over rising interest rates, islander Jodie Booth and her family decided to take matters into their own hands.

They have paid £300 to get out of their previous mortgage deal three months early, and have now secured a new, fixed-term mortgage deal for five years.

"I was just so happy, so happy because I've saved myself hundreds, or maybe thousands of pounds," she said.

"You've got to pay your mortgage - there's no way out of that. You either pay that or you sell your house.

"That's the priority outgoing, really - isn't it? So everything else would have to suffer."

Mortgage broker Peter Seymour said he thought negative equity would not happen

Concerns over rising interest rates were causing some prospective first-time buyers to abandon their plans, according to Peter Seymour, the managing director of mortgage brokers The Mortgage Shop.

He said the value of some Jersey properties might fall, and that some islanders might have to re-evaluate their spending habits due to the current economic situation.

But Mr Seymour believed that the uncertainty might only be temporary.

"With careful management, everyone will be able to stay with a roof over their house and in a couple of years' time emerge into an environment where hopefully rates are starting to fall," he said.

"We get these blips every now and then. Most people have survived.

"I simply don't think that negative equity will occur and I really don't believe that repossessions will occur either so long as people are careful with their budgets and don't panic."

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