Mortgages: States to launch review
Saturday 28th February 2009, 10:00AM GMT.
A MAJOR investigation into Jersey’s mortgage market is under way following allegations that Jersey Home Loans has ‘unfairly treated’ customers.
JHL, one of the Island’s biggest mortgage lenders, has come under severe criticism from some of its customers and even its own mortgage brokers for not reducing its variable rates in line with the Bank of England base rate.
Kevin Allenby, managing director of Omega Financial Services, said that he had never seen ‘such a shambles’ in his near 25 years in the industry and has described JHL’s treatment of customers as ‘atrocious’.
Treasury Minister Senator Philip Ozouf (pictured) has asked the Economic Development department and the Jersey Financial Services Commission to investigate if the mortgage market should be regulated. He also confirmed that he asked Jersey’s competition watchdog to look at the situation a number of weeks ago.
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Quite a few “investigations” going on at the moment ie Dental charges, mortgages, redundacy payments etc.
The problem is nothing is done, apart from hot air from our politicians, when these investigations are completed. Usually we don’t even hear when they are completed.
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Let’s get one thing straight; Jersey Home Loans does not have its own brokers. Mortgage Brokers are usually independent and act on behalf of the purchaser in order to find the best deal possible. Whilst on the subject of mortgage deals; why has it taken so long for a minister to refer the mortgage market to our competition authority?
Houses are the single most expensive purchase for most islanders and the number of mortgage providers has shrunk steadily over the years, during this time it has been all too obvious that Jersey residents do not get the same competitive interest deals from subsidiaries of banks which do great deals in the UK.
As well as investigating the mortgage providers it is important that the authority also investigates the lawyers and their fixed fees. There is very little competition here and it might cost more than £12,000 in fees to purchase an average family home. This surely cannot be right (unless you are a lawyer)
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the people who are financially stretched with their homeloans are least able to get any reduction in their mortgage repayments.
if you have borrowed maximally to purchase, then remortgaging or even downsizing and taking a new mortgage is not possible now that lenders have increased the percentage deposit required. the worst off/most at risk of financial compromise are least able to get any benefit from the reduced base rate. The economy will not benefit whilst so many people are in this position.
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Unfortunately I am one of the victims of JHL. When are JHL going to take responsibility for their extortionate practices and stop blaming the States and now their brokers. The parent company Kent Reliance Building society have reduced their standard variable rate and so has every lender in the UK and Jersey apart from JHL. They are using customers as political pawns to try and get a licence to raise deposits in the Island, which is a shameful practice. There is nothing VARIABLE about a JHL mortgage and in my opinion it can only be described as a sham. They have doubled their mortgage book in Jersey for the period sept 2007 – sept 2008 to £863,000,0000, and have stated that they do not want unhappy customers (Chairmans comment M.Lazenby). Well Mr Lazenby all you have to do is lower your rates instead of profiteering. Do we need regulation in this market? Quite clearly the answer is yes if the likes of JHL can behave in this manner and blame everybody else.
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I am not sure what the answer is. Most people I know like me are killing themselves with a mortgage, but I still pay less than I would in rent. Jersey is expensive to live, we all know that and I guess you have to adapt the lending to suit the borrowers otherwise people wouldn’t be able to borrow.
I’m glad that I didn’t have to find 20% deposit on my first purchase as I would never have got on the market.
Boris. Absoultely agree with you there on laywers fees, though it amazes me the number of people I have spoken to recently that didn’t think to negotiate this. I saved £4000 by ‘shopping’ around and playing one of against the other!
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Boris, lawyers do not have fixed fees and have not had for a while. Shop around, there are bargains to be had. I saved a fortune in two phone calls.
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Boris is absolutely right about Lawyers fees, they have escaped regulation for far too long, in fact they are a law onto themselves. The majority charge no less than £50 for a few minutes telephone call and they deliberately drag out the conversation to rake up their charges.
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Jersey homeloans have sold mortages which have been sold as variable rate.
They have not come down, despite the base rate coming down by 4%, so clearly they have missold this product, so should be simple for the financial services commission to take action!
What the politicians have to act on, is that this extra interest being paid to Jersey homeloans will actually take money out of the Jersey economy, thus making any recession last longer, increase repossessions etc. In other words it is worth the politicians as our elected representitives to take action. If they cant do it by legal means, perhaps they should offer loans at more competitive rates, using the rainy day fund. If the UK thinks it is worth spending billions propping up banks, surely it is worth Jersey spending millions protecting its hard working, tax paying citizens.
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Harry
You actually have a very good point; all that extra money being paid in interest is going straight into the coffers of a UK Building Society and therefore not being spent in Jersey exacerbating the current financial crisis.
On another point it is important to remember that if for arguments sake the base rate is 1% and the variable mortgage rate 5% then it is not 4% higher than the base rate but as much as 400% higher and this differential is getting larger the lower the base rate goes.
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oh .dear!! you poor rich things!!!!!
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Surprised that it has taken so long for this to be published. I wrote to Senator Ozouf in October and I have an email from him (24/10/08) stating “I have instigated a review of the local mortgage market to advise on how to boost competition to ensure sufficient liquidity in the market”. I suggested to him then that this area of finance should be reguilated as the JFSC were not interested.
Over 4 months and what action have we seen? None!!
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Nothing will be done and I doubt anything can be done.
The States will huff and puff a bit, JHL will ignore them and that will be it.
As for the States getting involved in the Jersey mortgage market using the rainy day fund they would have to be insane to to do that as it could result in large losses.
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I am none the wiser as to why Jersey Home Loans can`t reduce their Varible rates. Jersey Home Loans are the only building society or indeed Bank that has not reduced their standard variable rates over the last five months, even their parent company (Kent Reliance Building Society) has reduced rates.
Dispite the Bank Of England reducing base rates 5 times in as many months down to 1% and the 3 month LIBOR rate following suit from 6.30% (1-10-08) to 2.07% (23-2-09) Jersey Home Loans have not moved at all. It is interesting to note that Kent Reliance has reduced its savers rates over the same period! The only argument that has been put forward is that the States will not grant Jersey Home Loans a licence to raise deposits in the Island this does not excuse JHLs unacceptable stance. In more than 6 years of trading in Jersey they have never been lead to believe that they would get a licence the policy is clear. Furthermore they don`t have to investigate the introducing brokers of mis-selling they have to investigate why they have variable rate products that don`t vary downwards. To carry on charging existing customers rates over 7% + is simply scandalous and they should be ashamed of this behaviour. In the UK the Financial Services Authority (FSA) has an initiative called Treating customers Fairly TCF Outcome 1 – Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture
• Outcome 2 – Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly
• Outcome 3 – Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale
• Outcome 4 – Here customers receive advice, the advice is suitable and takes account of their circumstances
• Outcome 5 – Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and as they have been led to expect
• Outcome 6 – Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.
In my opinion JHL are well short of some of these outcomes, which is a shame as Jersey needs more competition in this market however JHL have lost their way.
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