Publication date: 5 January 2026 | Covering: December 2025
Monthly Briefing
- Bank of Jamaica holds policy rate at 5.75 per cent through December 2025
- US Federal Reserve cuts to 3.50–3.75 per cent in December — its third reduction of 2025
- Jamaica’s point-to-point inflation rises to 4.5 per cent in December 2025
- December remittances surge to US$315.3 million, up 13.6 per cent year-on-year
- UN report finds Jamaica still struggling to rebuild sixty days after Hurricane Melissa
- Government ROOFS grant programme processes applications for storm-damaged homeowners
Monetary Policy: The BOJ Holds as the Fed Cuts Again
The Bank of Jamaica’s Monetary Policy Committee held the overnight policy rate unchanged at 5.75 per cent per annum at its December 2025 meeting. It was the third consecutive meeting at which the BOJ maintained its rate since Hurricane Melissa’s October 2025 landfall — a period of extraordinary economic disruption that has constrained the Committee’s room for manoeuvre. With GDP contracting between 8 and 13 per cent in the fourth quarter of 2025 according to preliminary government estimates, the case for policy easing is evident. But with the BOJ’s own December 2025 Quarterly Monetary Policy Report projecting inflation rising to an average of 7.4 per cent over the following two years and peaking at 11.5 per cent in the June 2026 quarter, the Committee has judged that easing prematurely carries material risk.
The contrast with the United States Federal Reserve is instructive. The Fed reduced its federal funds rate by a further quarter-point on 10 December 2025, lowering the target range to 3.50 to 3.75 per cent — its third reduction of the year, following cuts in September and November 2025. The December 2025 cut brought the cumulative Fed easing in 2025 to 75 basis points, a meaningful shift in the US monetary policy stance. Fed officials accompanying the decision signalled caution about the pace of further reductions in 2026, projecting in their median forecast just one more quarter-point cut in the coming year — a signal that the era of rapid monetary easing in the United States was drawing to a close.
The divergence in direction between the Fed (cutting) and the BOJ (holding) reflects the different phases of the inflation and recovery cycles in the two countries. In the United States, consumer price inflation has been moderating, and the labour market is cooling toward sustainable levels. In Jamaica, by contrast, the hurricane-induced inflationary spike is still working through the economy, and the supply-side damage to productive capacity — in agriculture, tourism, and construction — has created cost pressures that the BOJ cannot address through monetary policy alone. The hold at 5.75 per cent is, in effect, a recognition that Jamaica’s path to recovery runs through the reconstruction effort rather than through the credit channel alone.
Inflation: Returning to Target, but Projections Remain Elevated
Jamaica’s point-to-point inflation rate for December 2025 was confirmed by the Statistical Institute of Jamaica at 4.5 per cent — a significant shift from the below-target readings that characterised the first half of 2025, and representing a further step-up from the 2.9 per cent recorded in October 2025. The monthly CPI increased by 1.3 per cent in December, driven by food prices, housing-related costs, and transport — all of which reflect both the hurricane’s disruption to local supply chains and the seasonal uplift in prices that typically accompanies the December holiday period in Jamaica.
That December’s 4.5 per cent reading falls within the BOJ’s target range of 4.0 to 6.0 per cent is significant. It suggests that the inflationary shock of the hurricane, while material, has not yet pushed prices durably above target — though the BOJ’s own projections anticipate that it will do so in coming quarters. The Bank’s December 2025 Quarterly Monetary Policy Report acknowledged that the macroeconomic outlook had been adversely affected by Hurricane Melissa and that inflation is projected to increase to an average of 7.4 per cent over the next two years, with inflation projected to rise above the target range over the next four quarters. For mortgage borrowers, this inflation trajectory matters because it directly affects the real cost of fixed monthly payments and the purchasing power of household incomes.
Hurricane Melissa: Sixty Days On and Still Rebuilding
On 2 December 2025 — fifty days after Hurricane Melissa’s landfall — the United Nations published a situation report under the headline “Fifty days on, Jamaica struggles to rebuild after Hurricane Melissa’s unprecedented destruction.” The UN’s assessment documented the ongoing difficulties facing a country grappling with damage that the World Bank and IDB had quantified at US$8.8 billion in their 19 November 2025 joint assessment — equivalent to approximately 41 per cent of Jamaica’s 2024 GDP and the costliest disaster in the island’s recorded history, more than four times the estimated losses from Hurricane Gilbert in 1988.
The total destruction encompassed approximately 215,000 buildings, with damage across housing, tourism, education, health, agriculture, energy, transport, and telecommunications. Agricultural losses alone were estimated at approximately US$180 million, according to a USDA Foreign Agricultural Service analysis. Hotels and resorts in the south and west of the island suffered extensive damage, reducing tourism capacity at a time when the sector’s foreign exchange earnings are critical to the exchange rate. By sixty days on — the period covered by this review — the reconstruction effort is underway but the full scale of the task ahead is only becoming clearer.
The government’s Shelter Recovery Programme, launched to address the housing dimension of the disaster, encompasses six initiatives: the ROOFS grant for homeowners and occupants, government-led repair, partnership-led repair, NHT support, modular housing solutions, and relocation or regularisation. The ROOFS initiative has been allocated an initial J$10 billion, with grants ranging from J$75,000 for minor damage to J$500,000 for severe damage. The official requirement for a formal damage assessment before accessing assistance has been emphasised by the Office of the Prime Minister — a process that has taken time to implement across all affected communities.
The Exchange Rate: Near Historic Highs as Remittances Surge
The Jamaican dollar exchange rate remained under pressure in December 2025, with the BOJ’s period average for the month at approximately J$159.88 per US dollar and the lowest intraday rate of J$160.05 recorded on 30 December 2025 — matching the all-time high reached in October 2025, the month of the hurricane. The combination of hurricane-related economic disruption, reduced tourism inflows, and the general uncertainty associated with a major natural disaster continues to weigh on market confidence in the Jamaican dollar.
Against this backdrop, the December remittance data provided a critical counterweight. Inflows of US$315.3 million in December 2025 — a 13.6 per cent increase compared with December 2024 — reflected the mobilisation of the Jamaican diaspora in response to the hurricane’s devastation. The United States accounted for 66.6 per cent of December inflows, with the United Kingdom providing 12.5 per cent, Canada 8.9 per cent, and the Cayman Islands 6.9 per cent. These remittances represent not merely family support but a critical source of foreign exchange that, at scale, provides a material offset to the hurricane-related deterioration in other foreign exchange earnings.
For housing finance specifically, December’s remittance surge is significant. Many Jamaican households use remittances to fund mortgage repayments, property improvements, or the gap between NHT finance and the full cost of a property purchase. A diaspora that is actively remitting at record levels — driven in part by the desire to help family members rebuild — is also a diaspora that is keeping housing-related spending elevated at a time when domestic incomes and savings have been severely tested by the disaster.
Mortgage Rates and NHT Finance in the Reconstruction Phase
Commercial bank mortgage rates in Jamaica remain in the range of approximately 7 to 12 per cent, unchanged since before Hurricane Melissa. There has been no movement in the BOJ policy rate to prompt a commercial rate adjustment, and the post-hurricane environment of elevated risk and constrained lender resources has reinforced existing pricing. For construction and renovation finance specifically — the fastest-growing segment of mortgage activity in the post-Melissa period — rates typically sit toward the upper end of this range, as lenders price in the construction completion risk and the extended disbursement timelines associated with project finance.
The NHT’s products remain the most affordable formal housing finance available to Jamaican workers in the formal sector. The income-based rate structure, offering 0 to 5 per cent depending on the borrower’s income level, was introduced on 1 July 2025 and has remained in place. Individual open market loan limits of J$9 million, build-on-own-land limits of J$11 million, and co-applicant combinations reaching J$23 million for three borrowers define the envelope of NHT-supported ownership. The NHT’s Hurricane Melissa Disaster Relief Initiatives — which include the Hurricane Relief Grant — offer financial assistance to contributors who suffered property damage, with the Trust processing applications in parallel with the government’s broader ROOFS programme.
Construction loan demand is running at elevated levels as homeowners attempt to make their properties habitable before the end of the Christmas season — a natural deadline for many Jamaican families. Where ROOFS grants are insufficient to cover the full cost of repairs, households are turning to commercial improvement loans and NHT improve loans to bridge the gap. The seven-year waiting period for a second NHT improve loan was reduced to seven years as of July 2025 (down from ten years), making this product accessible to a somewhat larger pool of contributors than previously.
Property Market: Resilience Under Pressure
Jamaica’s property market has experienced the full force of Hurricane Melissa’s economic shock — but in ways that differ from what might be expected. Transaction volumes have slowed in many parts of the island as buyers and sellers focus on immediate post-hurricane recovery rather than property dealings, and as uncertainty about insurance values, reconstruction costs, and the economic outlook clouds pricing decisions. In the most severely affected areas, properties with damaged structures have effectively been withdrawn from the market pending repair or assessment.
At the same time, the structural drivers of Jamaica’s property market have not changed. The housing deficit of more than 150,000 units remains intact — and has, in net terms, been worsened by the storm’s destruction. Tourism demand for rental accommodation, while temporarily suppressed in hurricane-damaged areas, is expected to recover as facilities are repaired. And the diaspora interest in Jamaican property, which has been a consistent support to demand in recent years, has if anything been reinforced by the hurricane — as overseas Jamaicans reflect on the vulnerability of family members who lack stable housing and seek to provide it.
Looking Ahead
As of 5 January 2026, Jamaica’s housing finance market is beginning a year that will be shaped primarily by two forces: the pace and cost of the post-Melissa reconstruction, and the trajectory of global energy prices as the Middle East conflict evolves. The BOJ’s next monetary policy meeting — expected in February 2026 — will provide the first rate signal of the new year. With inflation back within the target range at 4.5 per cent, the case for a cautious cut has strengthened; but the BOJ’s own projections for a significant inflation pickup in the coming quarters argue for a careful approach.
The US Federal Reserve’s third 2025 cut and its signal of only one further reduction in 2026 narrows the external pressure on the BOJ to ease — but also limits the room for BOJ cuts without widening the interest rate differential to a level that risks exchange rate instability. On the domestic front, the pace of ROOFS disbursements, the processing of NHT disaster relief applications, and the ability of Jamaica’s construction sector to absorb the rebuilding demand without excessive price inflation will be among the most closely watched indicators for 2026.
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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