Brazil’s financial market is embracing an innovative financing method that could significantly expand credit access.
This approach leverages properties already under the mortgage, allowing homeowners to secure additional loans against their homes. They can do this even if they are still paying off their original mortgages.
The recent “Marco das Garantias” law, which took effect at the end of 2023, has facilitated this shift by enabling properties to serve as collateral for multiple loans.
With this new model, a homeowner can borrow up to 60% of their property’s value, encompassing both the original mortgage and any subsequent loans.
This cap is designed to maintain financial stability and prevent excessive debt against a single property. The demand for this new type of loan is evident.
For instance, shortly after launching its “Use Casa Mais” program, Santander conducted over 1,000 simulations, indicating strong consumer interest.
Itaú Unibanco also reported substantial uptake, with its new loan products comprising 20% of all its home equity transactions soon after launch.
By mid-2024, the market for home equity loans reached R$21.7 billion ($3.95 billion). This marked a 21% increase from the previous year.
In the first half of the year alone, R$4.6 billion ($0.84 billion) in loans were issued, reflecting a 45% rise compared to the previous year.
This growth in home equity loans reflects a broader trend towards more accessible and flexible financial products.
It allows Brazilians to leverage their biggest assets—their homes. This helps them meet financial goals such as debt consolidation or home improvements.
As this segment continues to develop, it provides a vital resource for homeowners. It also illustrates the evolving dynamics of Brazil’s credit market.
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