Publication date: 5 October 2020 | Covering: September 2020
Monthly Briefing
- Jamaica general election September 3: Holness/JLP win decisive mandate; 49 of 63 seats; strong majority
- Fed September 15–16: holds 0.00–0.25%; average inflation targeting embedded in forward guidance
- US economy recovering; unemployment falling from April peak; but recovery pace moderating
- BOJ overnight rate at pandemic-era low; Jamaica COVID restrictions continuing; tourism minimal
- NHT individual ceiling J$6.5 million; rates 0, 2, 4 per cent; housing market resilient through pandemic
- COVID second wave building in Europe; US October outlook uncertain; winter season concern for Jamaica
Jamaica General Election: Holness Secures Decisive Second Term
The Jamaica Labour Party under Prime Minister Andrew Holness won a decisive general election victory on 3 September 2020, securing 49 of 63 parliamentary seats — the largest mandate in the party’s history. The result represented a significant endorsement of the Holness administration’s economic management through the COVID-19 crisis and its pre-pandemic track record of fiscal discipline, economic growth, and IMF programme compliance. The People’s National Party, led by Dr Peter Phillips, was reduced to 14 seats in a historic rout. The election was conducted under COVID protocols, with reduced gathering sizes and enhanced health measures at polling stations.
For the property and mortgage market, the election result provides political continuity and policy certainty at a time when the economy faces significant challenges. The Holness government’s commitment to the IMF programme framework, fiscal discipline, and its existing economic reform agenda — including housing development initiatives — is confirmed for a further term. The NHT’s operational framework, loan limits, and subsidised rate structure are expected to continue under the new administration. Investors and property market participants can plan against a backdrop of known policy priorities rather than the uncertainty of a potential change in government direction.
Federal Reserve September Meeting: Outcome-Based Forward Guidance
The Federal Open Market Committee held the federal funds rate at 0.00 to 0.25 per cent at its September 15 to 16, 2020 meeting and embedded the average inflation targeting framework — announced at Jackson Hole on 27 August — into its formal policy guidance. The Committee stated that it expected to maintain rates near zero “until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.” This outcome-based guidance represented a significant and deliberate commitment: the Fed would not tighten pre-emptively in anticipation of full employment or inflation reaching 2 per cent, but would wait until both conditions were actually met.
The Committee also maintained its asset purchase programme and reiterated its commitment to using the full range of its tools to support the economy. The updated dot plot showed all eighteen participants projecting rates at or near zero through end-2022, and fifteen of eighteen projecting no change through end-2023. For Jamaica’s mortgage market, the September FOMC outcome provided the most explicit and binding US central bank commitment yet to an extended period of near-zero rates, providing a durable and credible anchor for global financing conditions. Jamaican commercial mortgage rates, supported by low BOJ policy rates and this global backdrop, remain at historically favourable levels.
Jamaica’s Housing Market: Resilience Under Pressure
Jamaica’s residential property market continued to demonstrate resilience through September 2020, even as the broader economy remained under significant COVID-related stress. Tourism — the island’s largest economic sector — was essentially at a standstill, with visitor arrivals at a fraction of 2019 levels despite the June reopening of the international airport. The government’s CARE programme and other support measures had provided some income protection to households in the most affected sectors, but the scale of the economic contraction was severe. Despite this, residential property demand was being supported by underlying structural factors: household formation, diaspora purchasing activity, and the desire to convert savings into property assets in a low-interest environment.
The National Housing Trust’s loan programme remained active, with its J$6.5 million individual loan limit and subsidised rates of 0, 2, and 4 per cent providing the primary vehicle for affordable residential purchase. The BOJ’s pandemic-era low overnight rate supported commercial bank mortgage offerings at competitive levels. Some moderation in transaction volumes was observed compared with pre-pandemic 2019, but outright market contraction was limited by the structural demand factors and the mortgage market support. New development activity was constrained by construction cost increases and supply chain disruptions.
Looking Ahead
The US presidential election on 3 November is the dominant upcoming external event, with its outcome likely to influence fiscal policy, trade, and economic sentiment in the near term. The Federal Reserve’s November 4 to 5 meeting will provide the next policy assessment. For Jamaica, the trajectory of COVID cases in North American and European source markets will determine the winter tourism season outlook. The BOJ’s next policy communications will provide an updated assessment of Jamaica’s inflation and growth dynamics.
Mortgage & Housing Finance Disclaimer: This publication is for general information only and does not constitute mortgage, financial, legal or investment advice. Mortgage products, lending criteria, interest rates and borrowing costs vary between lenders and may change without notice. Readers should obtain independent advice from a qualified mortgage adviser, financial adviser or legal professional before making financial or property decisions.
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