Jamaica Homes Monthly Mortgage & Housing Finance Review — January 2025

Publication date: 5 February 2025 | Covering: January 2025

Monthly Briefing

• BOJ holds at 6.00 per cent following its fourth cut of 2024 on December 23; next meeting March
• US Federal Reserve holds 4.25–4.50 per cent at January 28–29 FOMC meeting
• December 2024 inflation confirmed at 5.0 per cent point-to-point; fourth month within target
• BOJ’s 2024 easing cycle: 100 basis points delivered in four steps from the 7.00 per cent peak
• NHT mortgage lending strong in 2024; higher limits and income-based rates anticipated for 2025
• Exchange rate stable; USD/JMD within historical range as tourism season supports inflows

2024 in Review: A Year of Four Cuts

For Jamaica’s mortgage and housing finance market, 2024 was the year in which the rate cycle decisively turned. After holding the overnight policy rate at 7.00 per cent for more than eighteen months following the completion of the post-pandemic tightening cycle, the Bank of Jamaica’s Monetary Policy Committee initiated a gradual easing process in August 2024. The first reduction — 25 basis points to 6.75 per cent, effective 21 August — was followed by three further cuts: to 6.50 per cent with effect from 1 October, to 6.25 per cent from 22 November, and finally to 6.00 per cent from 23 December. By the close of the year, the BOJ had delivered exactly 100 basis points of easing in four deliberate steps, bringing the policy rate to the lowest level since the tightening cycle began in 2021.

The catalyst for the easing was the return of inflation to the BOJ’s 4.0 to 6.0 per cent target range. After an extended period of above-target readings — driven by the global commodity price shocks of 2021 and 2022 and the associated supply chain disruptions — headline inflation entered the target range in September 2024 and has remained there through December, when the point-to-point rate was confirmed at 5.0 per cent. The BOJ’s communications throughout 2024 stressed that the pace of easing would remain gradual and data-dependent, and the four equal steps of 25 basis points each embodied that discipline.

The US Federal Reserve held the federal funds rate at 4.25 to 4.50 per cent at its first meeting of 2025, held on 28 and 29 January. The decision was broadly anticipated, with the Federal Open Market Committee noting that the US economy was performing well and that inflation, while declining, had not yet reached the 2 per cent target on a sustained basis. Fed Chair Jerome Powell emphasised that the FOMC was not pre-committed to further cuts in 2025 and that each decision would depend on incoming data. The Fed’s three rate reductions in the final quarter of 2024 — the 50 basis point September cut and the two 25 basis point reductions in November and December — brought the US rate to its current 4.25 to 4.50 per cent level from a peak of 5.25 to 5.50 per cent.

What the Easing Cycle Has Delivered for Mortgage Borrowers

The BOJ’s 100 basis points of easing in 2024 have not translated dollar-for-dollar into reductions in commercial mortgage rates, but the directional effect has been clear. Variable rate mortgage products benchmarked to the BOJ’s policy rate have adjusted downward, and fixed-rate mortgages being renewed in the current market are receiving more favourable terms than those available at the peak of the cycle in 2022 and 2023. The typical commercial bank mortgage rate range of approximately 7 to 12 per cent has narrowed modestly at its lower end, with some institutions offering qualifying borrowers rates in the 7.5 to 8.5 per cent range that would have been unusual twelve months ago.

The NHT’s rate structure has remained unchanged through 2024 — with contributors paying 0, 2, 4, or 5 per cent depending on their weekly income — but the gap between NHT rates and commercial rates has become more visible as a policy issue. With commercial rates declining from their 2022–23 peaks, the differential has narrowed somewhat, but the spread remains large enough to make NHT finance decisively the preferred option for eligible contributors. The oversubscription of NHT products relative to available funding reflects the degree to which contributors value this access.

NHT Mortgage Lending in 2024

Jamaica’s mortgage market showed resilience in 2024, supported by the NHT’s lending activity and the gradual improvement in commercial bank pricing toward the end of the year. The NHT’s mortgage portfolio grew in value terms, consistent with the pattern of rising loan utilisation as contributors moved to take advantage of the J$7.5 million individual limit in a market where property prices were pushing the upper bound of what that limit could cover. Housing advocacy groups and industry observers are anticipating an announcement on revised loan limits and rate structures in the first half of 2025 — changes that would materially expand the accessible market for NHT contributors.

The NHT’s pipeline of housing solutions under development remains substantial, with more than 41,000 units at various stages of construction and planning. The Trust has been working to accelerate delivery timelines, recognising that the structural housing deficit of more than 150,000 units can only be addressed by a sustained increase in the rate of new supply. The SMART Energy loan — currently capped at J$1.5 million — continues to generate interest, though the limit is increasingly seen as insufficient for a meaningful installation. An increase is expected to be part of any 2025 product reform package.

Inflation and the Exchange Rate: A Stable Foundation

The December 2024 CPI data confirms headline inflation at 5.0 per cent point-to-point — exactly in the middle of the BOJ’s 4.0 to 6.0 per cent target range and the fourth consecutive month of on-target performance. January 2025 is expected to show a modest monthly CPI change, consistent with the seasonal pattern in which post-Christmas demand normalisation and food price adjustments produce a relatively contained monthly movement. The BOJ will be looking at the January reading as it assesses whether the inflation trajectory remains consistent with its 2025 projections.

The Jamaican dollar has remained broadly stable against the US dollar through the opening weeks of 2025, with the exchange rate continuing within the general range of J$155 to J$159 that characterised the latter half of 2024. The BOJ’s foreign exchange market intervention has maintained orderly conditions, and the combination of tourism revenues — which are significant in the winter peak season — and remittance inflows has provided natural US dollar supply. The 2024 full-year remittance total of approximately US$3.36 billion is expected to be matched or exceeded in 2025, given the positive trajectory of inflows seen in recent months.

The Property Market: Entering 2025 With Momentum

Jamaica’s residential property market has entered 2025 with the underlying conditions for continued activity: a structural housing deficit that supports demand, a gradual improvement in commercial mortgage rates, and the anticipation of meaningful NHT product enhancements in the first half of the year. Transaction volumes in the final quarter of 2024 were broadly consistent with prior periods, though the highest mortgage rate environment in many years has moderated the pace of activity compared with the most active years of the early 2020s.

First-time buyers continue to face the most challenging affordability conditions. Rising property prices in urban areas, high commercial lending rates for those without significant NHT entitlement, and the shortage of affordable new housing collectively press on this segment. Government and NHT product improvements in 2025 are expected to provide some relief, but the structural challenge — insufficient supply of affordable housing relative to the number of households seeking it — will require a sustained multi-year commitment to construction and planning reform to meaningfully resolve.

Looking Ahead

The March BOJ meeting is the first rate decision event on the horizon for Jamaica’s mortgage market in 2025. With four months of on-target inflation, a stable external environment, and an easing cycle that has already delivered 100 basis points, the MPC has room to continue — but its communications suggest it will do so deliberately and only as the data supports. A further cut in March, or the May meeting if March sees a hold, would extend the easing cycle and, over time, support additional repricing in commercial mortgage products.

The NHT’s anticipated product reforms — higher loan limits and a more income-targeted rate structure — are the most watched development for Jamaica’s affordable housing segment in 2025. An announcement in the first half of the year is expected; when it comes, it will create immediate market activity among the contributors who have been waiting at the margin of eligibility. Combined with continued gradual easing in the commercial mortgage market and an expected improvement in housing supply from the NHT pipeline, the 2025 outlook for Jamaica’s housing finance market is cautiously positive.

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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.

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