Mortgages cost more in the Channel Islands due to high saving rates for investors, report concludes

  • ITV Channel's Emma Volney looks into whether homeowners are being punished for living in an offshore finance centre. Broadcast on Monday 10 June

Banks are charging Channel Island customers more for mortgages so they can offer better savings rates to foreign investors, new research from the Jersey Consumer Council has revealed.

Chairman Carl Walker explains: "They're trying to compete with the UK to attract people to invest their money here.

"For the banks to pay those higher interest rates on those savings and also make a profit, they have to recover those costs somewhere and one of those ways is to pass those on to the ordinary homeowner in Jersey who seems to be paying the price for living in an offshore finance centre."

Jersey homeowner Jamie Bourke says the high cost of getting onto the property ladder is making people consider their future in the island.

He explains: "We were in the UK previously and the rate we were paying there was hugely different, it stings."

When asked what impact it has, Jamie replies: "A lot of people I know are leaving."

However, Treasury Minister Deputy Elaine Millar says: "What we have to remember is that many of the savers now will be pensioners and they will have had no interest on their savings for a very long time, so there were low mortgage rates that fed into low deposit rates.

"The fact that savers are now getting a bit more in their savings is a counterbalance to the fact that interest rates have gone up and people are paying more for mortgages."

The Consumer Council told me that if you have a £100,000 mortgage then you would be paying up to an extra £20,000 more over the lifetime of that mortgage in the Channel Islands, compared to if you lived in the United Kingdom.

One couple told me they were thinking of leaving the island completely because of how ridiculous the situation has become.

The Consumer Council also urged the Government of Jersey and the States of Guernsey to do more and cut the red tape that banks say is the reason why mortgage rates are higher than in the UK.

However, ministers say there is only so much they can do.

In truth, both Bailiwicks know there is little they can do other than encourage banks to be as competitive as possible.

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