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Brazilian mortgages start the year on a high

The Brazilian property market continues to show signs of moving upwards. The latest figures for Brazilian mortgages reveal that January saw a year-on-year increase in loans of over 32%, the highest for four years.

Best January for 4 years

According to figures from the Brazilian Mortgages Association (ABECIP in Brazilian), banks released a total of R$5.1 billion in loans in the first month of the year. This represents an increase of 32.2% on January 2017 and the best figure for the month since 2014. The number of properties mortgaged in January totalled 19,900, 26% more than the same month last year.

Caixa bank topped the loan table with R$1.27 billion in Brazilian mortgages in January. Bradesco Bank followed with R$1.2 million and Itau Unibanco completed the top trio with loans valued at just over R$1 billion. Caixa took the top position due to the sharp increase in loans for construction while Itau Unibanco loaned most to private buyers.

Lowest interest rates

The reasons behind the hike in Brazilian mortgages in 2019 are two-fold. Firstly, the property market is showing strong signs of reactivation. Results for launches during Q4 last year surprised many analysts. New developments on the market skyrocketed by 55.7% and their value soared by 39.5% to reach a total of R$6.69 billion. Sales also experienced a strong increase and one of the largest Brazilian developers, EZTec announced the best year for sales since 2014.

The second lies in the record low-interest rates. The SELIC currently stands at 6.5% and analysts believe the rate will remain stable this year. Lower interest rates plus more favourable conditions for Brazilian mortgages have encouraged more buyers to enter the property market.

Investment versus own use

According to a survey carried out by MoneyTimes, a third of buyers in 2018 purchased Brazilian property for investment purposes. Of these, some 61% planned to use their purchase as a buy-to-let investment or holiday let in Brazil and 39% said they would resell the property.

When it comes to potential buyers in 2019, the tables shift considerably. Just 14% of those who intend to buy this year say they will do so for investment. A full 86% state that their purchase will be for their own use. According to ABECIP, this increase in demand indicates that the property market is heating up and the association expects figures for Brazilian mortgages this year to reflect this trend.

(Source: x)

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