Jersey mortgage 'discrepancies' probed by consumer council

Lenders are being asked to explain why mortgage deals are more expensive in Jersey than the UK

A watchdog has called on lenders to explain why some mortgage deals are more expensive in the Channel Islands.

The Jersey Consumer Council (JCC) said it had become aware of "discrepancies" between the interest rates offered by Jersey providers compared with UK parent lenders.

In an open letter, it called on lenders to provide an explanation to ensure a "fair and transparent mortgage market".

Jersey Bankers Association said pricing was affected by many factors.

Charles Molteno, president of the association, said: "Jersey is a unique jurisdiction with its own legal and regulatory regime that is quite different when compared to say the UK.

"Operating in this market therefore loses many benefits of the economies of scale that a business might have in the UK."

Housing Minister Deputy Sam Mezec said he would consider asking the government to look into whether there were any "regulatory issues" making it "more difficult in Jersey than other jurisdictions".

"We are hearing there is some kind of Jersey premium on mortgages," he said.

"The same mortgage lenders that already exist in the UK are charging for similar products a few percentage points higher in Jersey.

"It's not quite clear why that is at the moment."

'Huge difference'

Paul Scally, a property lawyer, said higher interest charges could be affecting thousands of islanders.

"I became aware at the end of last year that there is a potential difference of almost 1%, sometimes a little bit more, between UK borrowers and islanders," he said.

"It doesn't sound like a lot but potentially for young people or young families buying their first home, it would be a huge difference."

He said some banks could deem the risk rate to be higher in Jersey, but he added: "I'm not entirely sure that's correct in my experience.

"The impact that has is the affordability issue - it makes it that little bit more difficult for people to buy or refinance their mortgage in Jersey."

The JCC said it requested lenders respond to its letter within three weeks.

'Does not seem fair'

Carl Walker for JCC said: "We have written to the main mortgage providers in the Channel Islands to ask them to justify why their mortgage rates are higher in Jersey and in other islands compared to the UK High Street branches.

"It does not seem fair. We can not understand what the justification is for it."

Mr Walker said people contacted him over the last 12 months about the increased rates. He said it had impacted homeowners.

"When we have looked at data, we have seen that there is at least a 1% increase in the rates being applied in Jersey when compared to the UK," he said.

"It does not sound a lot, but month to month that could mean hundreds of pounds in a mortgage repayment."

Mr Walker said he was looking for "transparency" from banks and lenders as it "does not make sense at the moment."