MORTGAGES have emerged as a dominant force in Jamaica’s household credit growth, accounting for nearly half of total household loans as lending to homebuyers accelerated sharply in 2024. However, despite this robust expansion, the Bank of Jamaica (BOJ) affirms the financial system’s resilience, citing prudent regulatory safeguards and active monitoring to mitigate rising risks.

Mortgages grew by 12.5 per cent in real terms last year — the fastest pace since before 2017 — and have helped narrow the gap between mortgage and consumer loans on banks’ balance sheets, according to the BOJ’s 2024 Financial Stability Report (FSR) and regulatory responses issued in July 2025. Mortgages now constitute around 48.1 per cent of household loans, up from 39 per cent in 2019, underscoring a significant shift in borrower preference and lending strategy in Jamaica’s financial system.

Residential mortgages have more than doubled in volume over the past six years, rising from approximately $200 billion in April 2019 to $400 billion by November 2023, and reaching nearly $488 billion by the end of April 2025, according to BOJ data. This rapid expansion underscores the mortgage market’s growing footprint in Jamaica’s credit landscape.

It has pushed total household loans — mortgages and consumer loans such as car loans and credit cards — to now represent 55.6 per cent of total loans and 29.4 per cent of total assets of deposit-taking institutions (DTIs) at the end of 2024. The BOJ attributed this rise in household lending largely to persistent demand for housing, competitive mortgage products, and supportive government initiatives, even as the broader macro-financial environment saw mixed signals.

“The easing of domestic monetary policy in the second half of 2024 prompted varied responses across financial system participants. DTIs’ lending to households grew, primarily driven by mortgage loans,” the central bank noted in responses to Jamaica Observer on the matter. Inflation-adjusted household credit increased by 7 per cent in 2024, accelerating from 4.5 per cent in 2023, buoyed by the mortgage segment’s strength, while consumer loan growth remained modest.

Mortgage Growth Outpaces Consumer Loans, Dominate Household Credit

Mortgage lending’s 12.5 per cent real increase vastly outpaced consumer loans, which grew by just 2.4 per cent. This dynamic contributed to mortgages representing nearly half of household loans, a shift from being a smaller slice of the portfolio just five years ago.

Hand-in-hand with strong growth in mortgage lending, intensified marketing and competition among DTIs helped broaden credit access for homebuyers, even as average lending rates stayed elevated despite four policy rate cuts by the BOJ in the second half of the year.

“Mortgage market growth could partly be reflective of greater marketing efforts by DTIs during 2024,” the FSR stated, reflecting how financial institutions responded proactively to the easing monetary policy.

Household credit’s growing predominance also led to increased concentration risk. The Herfindahl-Hirschman Index (HHI), a widely used measure of credit concentration, rose to 3,053 in 2024 from 2,953 in 2023, highlighting the sector’s growing exposure. The three largest DTIs collectively accounted for 61.6 per cent of private sector credit at year end.

Scotia Group Jamaica Limited’s two banking subsidiaries, Scotiabank Jamaica and Scotia Jamaica Building Society, have a combined mortgage book of $107 billion as of April 30, a sharp rise from the $37.34 billion in October 2019. That meant Scotia Group had a one-fifth market share and exceeded JN Bank Limited and the VM Building Society, the country’s two oldest and largest mortgage providers.

Loan Quality Holds Steady But Past-Due Mortgages Rise

Despite the rapid expansion, household loan quality metrics remained broadly stable. Total household non-performing loans (NPLs) held at about 2.5 per cent of portfolio, essentially unchanged from the previous year. Yet, a closer look reveals that mortgage past-due loan (PDL) ratios were noticeably higher and “relatively elevated” compared to consumer loans, which also saw a slight uptick in delinquencies.

“Loan quality remained adequate, with potential vulnerabilities being actively managed,” BOJ said in its July 2025 response to
Sunday Finance, underlining robust supervision.

DTIs maintained strong provisioning, with loan loss reserves covering more than 100 per cent of non-performing household credit. In fact, provisioning levels exceeded regulatory minimums by around 60 percentage points relative to past-due loans as of May 2025 — a prudent cushion against credit deterioration.

Moreover, mortgages generally remain well-collateralised, providing an essential buffer against losses. The BOJ emphasised that these safeguards, combined with strict exposure limits on single borrowers and capital requirements adjusting for risk profiles and collateral, help contain systemic vulnerabilities.

Corporate Lending Contracts

In stark contrast to household lending, credit to non-financial corporates (NFCs) contracted by 0.9 per cent in real terms in 2024. The contraction was mainly due to increased loan repayments and a slowdown in new loan disbursements, reflecting cautious business investment amid still-elevated borrowing costs.

“New loans disbursed to the NFC sector declined, indicative of lower capital investments by firms,” the BOJ noted, adding that unchanged lending rates might have compounded credit restraint for corporates.

Nevertheless, the NFC sector continues to maintain relatively strong loan quality. The combined NPL ratio for the top five corporate sectors remained low at 1 per cent in 2024. Although the past-due loan ratio was slightly elevated, it showed improvement from the previous year, signalling better early stage arrears management.

Sectoral lending patterns showed gains primarily in distribution and professional services, while construction, tourism, and manufacturing faced contractions.

Persisting Risks From Concentration and Elevated Lending Rates

The growth in mortgage lending and household credit concentration poses heightened credit risk, particularly as lending rates have remained relatively high even after monetary easing.

These elevated rates contribute to increased delinquency pressures, with the DTI sector reporting a 3.1 per cent uptick in past-due loans in 2024 relative to 2023. Correspondingly, the NPL coverage ratio declined to 111 per cent but stayed comfortably above the prudential minimum of 50 per cent.

“Despite persistently high lending rates amid monetary easing, DTIs remain confident in their ability to manage credit risk effectively through provisioning, collateral, and strong supervision,” the BOJ explained.

Robust Capital and Liquidity Buffers Support Resilience

Despite pressures on profitability — with DTIs’ pre-tax profits declining by 19.2 per cent in 2024 due to compressed margins and increased operating costs — capital positions remained strong. The sector’s Capital Adequacy Ratio (CAR) held steady at 14.6 per cent — well above statutory minimums. Liquidity positions, though lower than the previous year, remained robust, with liquidity coverage ratios significantly exceeding regulatory thresholds.

Stress tests conducted at year-end 2024 demonstrated the sector’s capacity to withstand severe market shocks, including interest rate hikes, foreign exchange depreciation, rising NPLs, and equity price declines, underscoring system resilience.

Jamaica’s mortgage lending surged in 2024 to nearly half of household loans, driving overall credit growth amid stable loan quality and robust regulatory safeguards managing concentration and credit risks.