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 Jersey.
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.
