Economic Forces Sustain Elevated Mortgage Rates In Brazil
Date
5/12/2024 6:22:36 AM
(MENAFN- The Rio Times) In Brazil, high demand and limited funding are keeping mortgage rates elevated for the foreseeable future.
Although reductions in the Selic rate last year hinted at lower mortgage rates, these expectations have not materialized.
Analysts now predict a rise in interest rates, driven by strong credit demand and a lack of affordable financing options.
The Brazilian Association of Real estate Credit ABECIP , expresses skepticism about any forthcoming reductions in rates.
Experts emphasiz that current data indicate no signs of interest rate changes, highlighting the need for continuous market vigilance.
Currently, the average mortgage rate stands at 11.6%, posing a significant hurdle for potential homeowners by increasing monthly payments considerably.
Despite these challenges, the mortgage sector demonstrates resilience.
Data shows mortgage financing reached R$255 billion in 2021, dipped to R$241 billion in 2022, and climbed to R$251 billion in 2023.
Projections for 2024 foresee mortgage financing reaching an unprecedented R$259 billion.
Cláudio Gallina of Fitch Ratings highlights to Estadão likely rate hikes, attributing them to global economic tensions and domestic fiscal delays, which heighten credit risks.
This week, the pace of Selic rate cuts slowed, with the Central Bank's committee reducing it to 0.25%, bringing it to 10.5%.
The financing structure in real estate largely avoids lower-cost savings accounts, pushing rates higher.
In 2023, 27% of mortgage funds came from more expensive sources, a situation that limits significant rate decreases.
Economic Forces Sustain Elevated Mortgage Rates in Brazil
No credit crunch is expected, but loan volume pressures suggest that high rates will continue due to limited supply.
Citi analyst André Mazini views this as ongoing costly credit, but expects possible easing later as property deliveries rise.
Speaking to local media, Priscilla Basso hints at possible mid-year rate stabilization, linked to rising property completions requiring improved financing.
This scenario shows the complex economic factors impacting the Brazilian mortgage market, crucial for stakeholders and prospective homeowners.
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