RIO DE JANEIRO, BRAZIL – After breaking records last year and also in the first half of 2021, real estate financing with funds from savings should close the year totaling R$195 (US$37.5) billion, up 57% from 2020.
The projection and data were released today by ABECIP (Brazilian Association of Real Estate Credit and Savings) and considers both the loans mobilized by end consumers for the purchase of real estate, and those taken out by construction companies for the execution of works.
“Purchase financing is currently the main driver. In June we hit the R$15 billion mark in loans granted in a single month for the first time this year,” said the association’s president Cristiane Portella at a press conference. By way of comparison, in June 2020, the volume of financing for real estate purchases totaled R$7 billion.
ABECIP’s data show that there were variations between regions and states, although a positive wave is observed all across Brazil. In the first semester of 2021, the volume of real estate credit grew most in Rio Grande do Norte (193%), Pará (184%), Ceará (169%), Maranhão (161%), and Sergipe (154%). No state registered a decrease in the period.
From financing to acquisition, Cristiane highlighted the prevalence of operations involving used real estate, which grew faster than transactions with new properties.
The data show that in the first half of the year, used real estate represented just under 70% of total loans granted in real estate credit. In 2018, the distribution was almost equal between new and used. “We believe that there was stock of apartments to be sold since 2019, which were ultimately sold in 2020 and 2021,” she explained.
This year there was a slight increase in default of the housing loan portfolio with funds from savings, from 1.6% in 2010 to 1.8% in June 2021. “Given that we are witnessing an increase in accumulated formal employment and given the importance of real estate in the family budget, we do not see that default will be a major issue, nor will it reduce institutions’ willingness to grant credit,” Cristiane said.
In her opinion, the most acute period of the pandemic passed with the institutions relaxing conditions. Now that the economy is more normalized, it should be no different.
For the real estate financing interest rate scenario, Cristiane pointed out that financial institutions will naturally adjust their rates, following the upward trajectory of the SELIC benchmark. But considering the industry funding, consisting of funds invested in savings accounts, this comes with a limit.
Under the remuneration rules in place since 2012, savings accounts pay 70% of the SELIC rate when it is below 8.5% a year. When it rises above this level, it offers investors a fixed rate of 0.5% per month (or 6.17% per year). Thus, even if the SELIC were to return to two digits – a scenario not envisaged by ABECIP for at least the next 10 years – the cost of funding for banks would be lower. This would allow them to maintain more attractive conditions for real estate financing.
“In the second half of the year, we should see upward adjustments in interest rates, but not necessarily in the same magnitude as the SELIC, because real estate financing is long-term, we are in a moment of pro-consumer competition among institutions. If we look at the history, these will still be attractive rates,” Cristiane said.
“We won’t even come close to reaching the 2017 rates, when they were over 11% per year.” Currently, it is not uncommon for institutions to work with interest rates below 7% per year.
In any event, according to the executive, consumers interested in buying any property should monitor the market trends. In addition to the adjustments expected for real estate financing rates, the sector is seeing a recomposition of house and apartment prices throughout the country. “Considering the next few years, the best time to buy is now.”