Barbadian families are deep in debt.
While the latest Financial Stability Report (FSR) flags the $6.64 billion in household debt at the end of 2025 as one of the “critical areas of supervisory attention”, economist Dr Ankie Scott-Joseph warned that the bigger concern was Bajans owing lenders more than they are earning, an outcome which worsened last year for the first time since the 2020 pandemic.
The 2025 FSR, which is published by the Central Bank of Barbados and the Financial Services Commission, disclosed that “household indebtedness rose in 2025, reversing several years of gradual improvement”, but noted that families were able to make their loan payments.
Financial sector regulators said that households’ continued accumulation of savings “built resilience to income shocks”, as they warned that “rising borrowing costs or a deterioration in labour market conditions could strain more vulnerable households with limited financial buffers, underscoring the need for close monitoring of household vulnerabilities”.
With the household debt stock rising from $6.40 billion in 2024 to $6.64 billion last year, the FSR also shared that Barbadians owed more debt than they were earning in income. This category of debt is the money that all individuals living in a home have borrowed and have to repay to commercial banks and other lenders, including for mortgages, car loans, other consumer loans and credit cards.
“The debt-to-income (DTI) ratio increased by approximately seven percentage points to 162 per cent, its first material rise since 2020 and above the pre-pandemic level of 154 per cent,” it stated.
“The debt service ratio (DSR) was unchanged at eight per cent, indicating that affordability was maintained despite the higher debt stock. The divergence between the two measures warrants monitoring: households are carrying more debt relative to income, and the stability of the debt service ratio depends on lending rates remaining at current levels.”
Scott-Joseph found this section of the analysis on household debt concerning.
“The $6.64 billion does not tell you much on its own. Look instead at what households owe against what they earn. Barbadian households owe about $1.62 for every dollar they earn in a year. That figure had been falling since 2020, and last year it rose,” said the economics lecturer at The University of the West Indies, Cave Hill Campus.
“Before COVID it was $1.54, so we are now worse off than we were then. Savings grew at about the same rate as the debt, so people are not raiding their savings to keep up. But that saving is not spread evenly, and the households that need a cushion most are the ones least likely to have one.”
She added: “Loan payments are affordable now, but only while interest rates stay where they are.
“About eight cents of every dollar a household earns goes back to the bank in loan payments, and that did not move last year. Your monthly payment is set by your loan rate. If the banks raise rates, the payment goes up, and the extra has to come from somewhere. Usually, it is the grocery bill.”
The report stated that household lending remained the largest source of loan exposure in 2025, describing associated risks as “contained but concentrated”.
“Loans to households accounted for approximately 54 per cent of DTIs’ loan portfolios and grew modestly, driven by mortgages and consumer credit. Despite rising debt levels, key indicators of indebtedness and debt serviceability remained stable, supported by favourable lending conditions.
“However, the high concentration of credit in the household sector leaves the system exposed to shifts in labour market conditions or external shocks, which could weaken repayment capacity and affect asset quality,” it added.
The FSR also said the composition of household debt “remained relatively unchanged” in 2025, with mortgages continuing to dominate and consumer lending strengthening.
“Mortgage balances grew by 2.1 per cent alongside improved credit quality. Banks extended 14.7 per cent more new mortgages to households than in 2024,” financial sector regulators reported.
“Consumer loan growth was driven by higher demand for auto financing, while credit card balances increased modestly by 0.6 per cent. Credit quality improved significantly, with the share of non-performing credit card loans declining from 3.5 per cent in 2024 to 2.9 per cent in 2025, suggesting improved repayment capacity.”
Credit card transactions by households reached $1.03 billion in 2025, up from $1.01 billion in 2024.
Scott-Joseph said: “Watch the car loans. Most of what households owe is on houses, and a mortgage leaves you owning something at the end. The smaller part is consumer borrowing and that is where the growth was last year. The report says car loans drove it. A car is worth less every year you own it. What you owe on it stays the same.
“For several years, households slowly paid down what they owed relative to their income. Last year that turned around. One year is not a trend, but it is a moment to pay attention. A loan with no savings behind it means the first bad month goes on credit. Households should save at least one month of bills before taking on more debt,” she said.