Watchdog wants greater transparency from Jersey mortgage lenders

A consumer watchdog investigation into why Jersey residents are paying more for their mortgages has called for “greater transparency” from the banking sector.

The Jersey Consumer Council (JCC) report reveals that rates offered by lenders in Jersey were around 1% higher than rates offered by the same banks in the UK.

Jersey banks said the higher rates were due to their “operational structure”, but the JCC said this had led to “confusion” for customers.

The Government said it was encouraging Jersey lenders to offer competitive rates and would continue to monitor the availability of mortgages.

JCC survey found Jersey consumers ‘struggle to understand’ why they have to pay up to £20,000 more for £100,000 over the life of a mortgage when they borrow over 25 years, than British customers of the same bank.

According to the report, this gap “raises serious questions about the price islanders pay for living in an international financial center.”

The report adds that many of these banks still align with their UK parent companies, in terms of branding, marketing materials and products that follow the Bank of England base rate.

The JCC wrote to lenders in March demanding explanations to ensure a “fair and transparent mortgage market”.

The island’s banks said the difference in rates was due to their status as separate and isolated entities from their British counterparts.

The JCC noted that the rates are further influenced by the higher savings rates offered in Jersey, which are designed to attract investment.

However, the survey findings “highlight the need for greater transparency from the banking industry to help consumers better understand the differences.”

He adds that the government must re-evaluate “the balance between attracting inward investment and ensuring affordable home ownership for Islanders”.

Assistant Minister for Financial Services, Elaine Millar MP, said the Government was aware of the report and “may consider discussing its contents with the authors in due course”.

“The Jersey property market has many different characteristics to the UK and there is much less choice of mortgage lenders due to the small size of the market,” Ms Millar said.

“We continue to encourage Jersey banks to offer a range of competitive mortgage products to Islanders and will continue to monitor this availability closely.