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Mortgage Market in Brazil Continues to Expand

Brazil has a relatively young mortgage market, but it’s one that is growing fast as purchasing power among Brazilians increases and more banks offer financing for property purchase. One area that forms a focal point for Brazilian banks offering mortgages is Ceará in the northeast of the country.


In this state, the volume of property transactions have grown dramatically over the last few years and all the large banks have noted a marked increase in mortgage financing in Ceará. For the Bank of Brazil, the state ranks as the 11th most important in the country. Mortgage lending by this bank in Ceará has grown by a massive 650 per cent over the last four years – while the amount borrowed for mortgages in 2010 was just R$46 million, in 2013 this figure had reached R$345 million, reflecting the dramatic increase in activity in the property market.


Other banks report similar hikes in demand for housing loans. Mortgage lending by Itaú bank grew by 26.1 per cent in Ceará in the year to June 2014 and for Bradesco, financing for property purchase increased by well over a third in the same period. Brazil’s largest mortgage provider, Caixa Economica Federal, lent over R$1 billion in Ceará during the first half of this year for a total of 9,510 units, a 10 per cent increase on 2013.


Ceará continues to feature as one of the hotspots for property in Brazil. Its capital Fortaleza consistently registers some of the highest rises in the country in both prices and demand. The latest national price index published by Fipe Zap recorded in July a year-on-year price rise in properties in Fortaleza of 13.1 per cent, considerably higher than the national average of 10.4 per cent. Prices have increased by 6.6 per cent in the Ceará capital so far this year.


Mortgage lending generally in Brazil continues to rise. Monthly figures for July showed a 14.1 per cent increase on June bringing year-on-year growth to 4.3 per cent. In the first seven months of this year, mortgage financing was approved for some 307,000 units throughout the country, representing R$10.4 billion in business.


This tendency is expected to continue as more Brazilian banks add mortgage financing to their portfolio of products. The wider availability of housing loans is excellent news for the consumer who can now shop around for the best mortgage products and rates. The increased competition for business also means banks have reduced their charges on loans making it cheaper to take out a mortgage in Brazil.


Source: ABECIP-Associacao Brasileira das Entidades de Crédito Inmoniliário e Poupanca

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