Paving blocks are prone to cracking during their service life. Therefore, the use of fibers such as banana fibers (BF) in paving blocks can improve their mechanical properties and long-term performance. Banana fibers can be considered as an environmentally friendly building material, thus contributing toward sustainability. The impact of BF incorporation on mortar’s mechanical properties and volume stability is examined in this research. To this end, five mixes were developed with various BF additions relative to the total volume of mortar: 0%, 0.5%, 1%, 1.5%, and 2%. Compressive strength, flexural strength, chemical shrinkage, autogenous shrinkage, drying shrink age, and expansion experiments were conducted for up to 90 days. The incorporation of 0.5% BF resulted in an increase in compressive and flexural strength by 7% and 5% compared to the control mix. Regarding volume stability, the results show that 2% BF decreases chemical shrinkage by 15%, autogenous shrinkage by 59%, drying shrinkage by 48%, and expansion by 61% when compared to the control mix. A hyperbolic model was used to accurately predict the variation in length change as a function of the curing age, which served to further explain experimental data. A significant correlation is noted between chemical shrinkage and other length change parameters.