ISLANDERS appear set to continue paying a “Jersey premium” on their mortgages, despite a rate-cutting war between British banks sparking improved offers for home owners in the UK.
Several major UK lenders, including HSBC, Barclays and Halifax have recently announced deals with rates below 4%.
This follows a move by the Bank of England to cut its base rate by 0.25% at the start of this month.
It is the first time that the figure, now 5%, has come down since 2020.
But research carried out by the JEP has found that the lowest rate on a five-year fixed deal (with a 40% deposit) being offered in Jersey recently was around 4.89%, ranging up to 5.99%.
The data is indicative of the so-called “Jersey premium” referenced by Jersey Consumer Council chair Carl Walker earlier this year, when he questioned why some Islanders were paying hundreds of pounds more on their mortgages than they would be paying with their banks’ UK counterparts.
Former Housing Minister David Warr – who now sits on the Environment, Housing and Infrastructure Scrutiny Panel – yesterday cited “risk appetite” among local banks, “a confined market” as well as “a significant amount of private lending” as some contributing factors.
“What’s depressing about this situation is that the price of a home in Jersey is, on average, higher than in the UK – so the economic consequences are [already] so much higher.
“We are seeing a decline in transactions in the Royal Court, the market is cooling,” he added, stressing that “affordability” remained a key issue.
Estate agent Harry Trower agreed that local mortgage rates were “separate” to those of the UK, although he estimated that they “may start coming down” at the start of next year.
Instead, he placed a greater emphasis on house prices, adding that: “Everything is about affordability at the moment – those who acknowledge that and adjust accordingly get houses sold.”
Investigation
An investigation by the JCC this year found that the banks “attribute this difference to their status as ring-fenced and separate entities from their UK counterparts”.
“The Consumer Council, however, has concluded that the elevated mortgage rates are further influenced by the higher savings rates offered in Jersey, which are designed to attract both local and inward investment,” it said in a statement in June.
