Jamaica Homes Monthly Mortgage & Housing Finance Review — February 2025

Publication date: 5 March 2025 | Covering: February 2025

Monthly Briefing

• BOJ holds at 6.00 per cent since December 2024 cut; next meeting expected mid-March
• US Federal Reserve holds 4.25–4.50 per cent at January 28–29 meeting; patient stance maintained
• Jamaica inflation within 4.0–6.0 per cent target for fifth consecutive month
• Full-year 2024 remittances confirmed near US$3.36 billion; 2025 inflows off to solid start
• Industry calls for NHT loan limit refresh intensify as urban property prices outpace J$7.5 million
• Commercial mortgage rates at 7–12 per cent as BOJ easing cycle gradually transmits to lenders

The Rate Environment: BOJ Holds at 6.00 Per Cent

The Bank of Jamaica’s overnight policy rate has remained at 6.00 per cent since the December 23 decision, which was the fourth and final cut of 2024, reducing the rate from 6.25 per cent as part of the easing cycle that had commenced in August of that year. No BOJ monetary policy meeting was held in February 2025; the next decision is expected in the second half of March. The Committee’s December communications emphasised a gradual, data-dependent approach to further easing, conditional on inflation continuing to perform within the 4.0 to 6.0 per cent target range. The five months of on-target readings since September 2024 provide a constructive backdrop for that next decision.

In the United States, the Federal Reserve held the federal funds rate at 4.25 to 4.50 per cent at its January 28–29 FOMC meeting — the first meeting of 2025, and the first under the pressure of a changed political landscape following the November 2024 election. Federal Reserve Chair Jerome Powell acknowledged the complexity of the current environment, with inflation not yet at target and a resilient labour market providing little incentive for pre-emptive easing. For Jamaica, the Fed’s patient posture maintains the interest rate differential that has supported the Jamaican dollar over recent months.

Commercial mortgage rates in Jamaica continue to reflect the gradual transmission of the BOJ’s 2024 easing cycle. The typical range — approximately 7 to 12 per cent across deposit-taking institutions — has shifted modestly downward at its lower end compared with the rates prevailing at the peak of the tightening cycle, but the pass-through has been slow and uneven. Banks that locked in longer-term funding at higher rates continue to face higher marginal funding costs; those with more flexible funding structures have been faster to reduce their mortgage pricing. Variable rate borrowers with mortgage contracts benchmarked to the BOJ policy rate have seen the most direct benefit.

Inflation: Five Months On Target, Momentum Building

Jamaica’s headline inflation continued its track within the BOJ’s 4.0 to 6.0 per cent target range through February 2025 — the fifth consecutive month of on-target performance since September 2024. The February point-to-point reading is expected to confirm a rate in the lower half of the target band, consistent with the gradual disinflation that characterised the closing months of 2024 and the opening of 2025. The BOJ’s most recent projections, published in the December 2024 Quarterly Monetary Policy Report, anticipated that headline inflation would remain within the range through 2025, and the February data supports that projection.

The key drivers of the current benign inflation environment include the moderation of global food prices, a period of relative stability in energy markets, and the lagged effects of the BOJ’s prior monetary tightening. The Jamaican dollar’s relative stability — with the exchange rate against the US dollar broadly contained within a narrow range — has also suppressed the inflationary impact of imported goods, which are a significant component of Jamaica’s consumer price basket. For mortgage borrowers, the return to moderate inflation supports household budgets and affordability in ways that the higher readings of 2022 and 2023 did not.

NHT: The Case for a Loan Limit Refresh

The National Housing Trust’s individual open market loan limit has stood at J$7.5 million since July 2023, when it was raised from J$6.5 million as part of a package of product reforms. At the time, the J$7.5 million limit was broadly sufficient to cover a significant share of affordable urban residential properties in Jamaica; eighteen months later, the picture has changed. Property price inflation in urban centres — particularly in greater Kingston, Portmore, Montego Bay, and Spanish Town — has pushed a growing proportion of entry-level properties above J$7.5 million. For a single NHT contributor without a co-applicant or access to supplementary commercial finance, the limit effectively closes off access to much of the affordable urban market.

Industry stakeholders, including developers, real estate associations, and housing advocacy groups, have been making the case for a limit increase with increasing urgency. The NHT itself has signalled awareness of the issue, and Prime Minister Andrew Holness’s government has made housing affordability a policy priority in the current parliamentary term. Observers anticipate that a formal announcement on a new limit structure and revised rate structure could come in the first half of 2025. The build-on-own-land limit — set at J$10 million since July 2023 — has been somewhat more resilient against construction cost inflation, but self-builders in high-cost urban areas are also finding it insufficient to cover modern construction budgets.

The NHT continues to offer its SMART Energy loan — capped at J$1.5 million — for the installation of photovoltaic systems and rainwater harvesting. Interest in this product has grown as electricity prices have remained elevated and more homeowners seek the dual benefit of lower utility bills and a degree of energy independence. The current J$1.5 million limit is increasingly seen as insufficient to cover a meaningful installation; industry voices are calling for an increase commensurate with actual market costs.

Remittances: 2024 Confirmed, 2025 Starting Well

The Bank of Jamaica has confirmed full-year 2024 remittance inflows at approximately US$3.36 billion — representing a marginal decline of less than half a per cent from the US$3.37 billion recorded in 2023, but maintaining Jamaica’s position as one of the most remittance-intensive economies in the Caribbean on a per capita basis. The flows have been broadly stable for three years running, reflecting the maturity and resilience of Jamaica’s diaspora network and the robustness of employment in the primary source countries. The United States accounts for the largest share, followed by Canada, the United Kingdom, and the Cayman Islands.

Early January 2025 data showed inflows running at a pace consistent with, and in some categories above, the equivalent period of 2024. This is encouraging for the full-year outlook. Remittances matter directly for the housing market: for recipient households, they are often the primary source of savings for mortgage deposits and ongoing repayment capacity; for the broader economy, they provide the foreign exchange that stabilises the Jamaican dollar, which in turn moderates the inflation that feeds into property costs and living expenses.

The Property Market: Demand Outpacing Supply

Jamaica’s residential property market entered 2025 on a firm footing. Transaction volumes through the end of 2024 were broadly comparable to 2023, and the mix of buyers continued to reflect both local and diaspora demand. In the affordable segment, the most significant pressure is the mismatch between available NHT finance and the price of available properties — a gap that the anticipated loan limit increases are expected to partially address. In the mid and upper segments, discretionary demand from higher-income buyers and investors has remained steady.

The 150,000-unit structural housing deficit has not materially narrowed; the rate of new unit delivery through the NHT and private sector pipelines has been insufficient to offset the formation of new households that require accommodation. This structural imbalance creates a floor under property prices even in a high-rate environment and means that any improvement in financing conditions — through lower interest rates or higher NHT limits — risks translating into price appreciation rather than expanded access unless new supply keeps pace with stimulated demand.

Looking Ahead

The BOJ’s March meeting will be watched closely for a signal on the next rate move. With five months of on-target inflation, a stable exchange rate, and the easing cycle already 100 basis points into its journey, the conditions for a further cut are building but the BOJ’s communications suggest it will not rush. The Fed’s next meeting in March and the subsequent data releases will also inform the external backdrop. Any easing from the Fed in 2025 would provide additional tailwinds for Jamaica.

For the NHT and affordable housing, the most eagerly awaited development is a formal government announcement on revised loan limits and rate structures. Industry stakeholders expect this to come in the first half of 2025; once confirmed, the effect on buyer confidence and market activity could be rapid and meaningful. The NHT’s pipeline of 41,000-plus housing solutions remains the most significant source of new affordable supply, and any product improvements that stimulate demand should ideally be paired with accelerated delivery timelines.

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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.