CONSUMERS since March have been increasingly consolidating their debt, according to recent Bank of Jamaica (BOJ) data.

The central bank data showed that the value of new business for instalment credit — a type of loan that has a fixed number of payments typically covering motor finance, retail finance and unsecured personal loans — associated with debt consolidated increased from an average of $163 million over the three years to 2010 to just over $600 million in the three months to May 2011.

The jump in debt consolidation was first noticeable in March, when new business totalled $508.6 million compared to $258 million a year earlier, and was followed by $723.5 million (2010: $282.2 million) in new business in April and $580.6 million (2010: 220.1 million) in new business in May.

Banks in Jamaica have been seeing stocks of non-performing loans rise over the last three years and have from time to time made announcements that they are working with debtors to help them pay off loans.

The rise in debt consolidation, which involves taking out one loan to pay off many others, is likely a reflection of such initiatives while consumers would probably prefer taking on new loans now at considerably lower interest rates to pay off higher cost debts.

New business for instalment credit for motor cars, when compared to year-earlier levels, was higher throughout 2010 and up to February this year, but declined year on year in March and April before rising by 26 per cent in May.