Like so many countries around the world, Brazil has been subject to lockdown restrictions since March. But – again in common with many other nations – the Brazilian property market is posting increases across the board. A case in point are Ceará mortgage loans, which rose by nearly 40% in May in this northeastern state.
More units financed
At the start of the pandemic, analysts predicted a resilient property market in Northeast Brazil. However, the most recent figures for mortgage lending have caught them by surprise. Ceará mortgage loans have astounded experts who did not expect such a surge in the number of applications and approvals.
According to the Brazilian Mortgage Assocation (ABECIP), the number of units financed in the state of Ceará went up by 8.05% between January and May. The figure for May itself is even more impressive with nearly 40% more units financed.
Slightly lower value
In terms of value, Ceará mortgage loans saw a very slight dip in the first five months of the year. The total amount financed by mortgages in the state fell to R$468.4 million between January and May, down from R$477 million in 2019.
However, the month of May broke the records yet again. Mortgage lending in Ceará reached a total value of R4124.3 million, up 14% on the same month last year. “It’s important to see figures maintained during a crisis,” said Cristiane Portella, President of ABECIP. “The Ceará property market is in line with the rest of Brazil and these are extremely positive figures.”
Mirroring national trend
Despite the arrival of the pandemic, the Brazil property market has maintained its momentum. Figures released by ABECIP show that mortgage lending rose by 25.2% in the first five months of 2020 to reach a value of R$34.08 billion.
Reasons behind more Ceará mortgage loans
Analysts point to two key reasons for the increase in mortgage lending, both in Ceará and Brazil. The first and possibly most influential are interest rates. The Brazilian SELIC currently stands at its lowest ever: just 2.25%. This in turn brings down mortgage interest rates, making loans to buy property more attraction and accessible.
The second reason lies in the property market itself. Throughout Brazil, house prices have attained stability since 2015 and as a result, more people are buying. Developers of new projects are offering good deals and better payment plans, opening up the market to a wider customer profile.
Better range of mortgage products
Lower mortgage interest rates have expanded the market for loans themselves. Brazilian banks now offer a far wider range of products than just a few years ago. Brazilian mortgages on the market currently offer interest rates from 6.5%, over up to 35 years.
Loan-to-value requirements have also shifted and can be as high as 82% as is the case with Ceará mortgage loans from Itaú bank. Plus buyers now have greater access to loans for different amounts – some banks will finance just R$20,000 while other raise the bar to R$5 million.
Room for growth
Despite record low interest rates and the arrival of new mortgage products, the market remains largely undeveloped in Brazil. “We finance less than 2% of our GDP,” says Tiberio Benevides, President of the Ceará Association of Real Estate Agents (CRECI-CEARA). He compares it to 20% in Chile and European countries where mortgage lending exceeds 58%.
Analysts believe that the rise in mortgage lending will boost the Brazilian property market across the board. Lower-income families now have access to financing to buy first homes while more affluent Brazilians can take out affordable loans to purchase holiday homes.