Major Brazilian Banks Raise Mortgage Rates and Tighten Lending Requirements

Brazilian banks have started increasing mortgage rates and implementing stricter lending conditions as the Central Bank raises basic interest rates (Selic). Itaú Unibanco led this trend by raising its average annual rate from 10.49% to 10.79% in early October.

Caixa Econômica Federal, which handles 70% of Brazil‘s mortgage lending, maintains current rates but will increase down payment requirements starting November 1st.

The SAC payment system will require a 30% down payment instead of 20%, while the Price system increases from 30% to 50%.

Banks face depleting savings account resources traditionally used for mortgage funding. This shortage forces them to seek alternative funding sources directly affected by Selic rate changes.

The mortgage market shows unexpected vigor, with lending reaching R$118.5 billion ($21.16 billion) in the first eight months of 2024. This represents 17.6% growth compared to the same period in 2023.

Here are the current mortgage rates at major Brazilian banks:

• Caixa Econômica Federal offers rates from TR + 8.99% to 9.99% annually
• Itaú Unibanco starts at TR + 10.79% annually
• Bradesco begins at TR + 10.49% annually
• Santander ranges from TR + 10.99% to 12.99% annually
• Banco do Brasil starts at TR + 10.29% annually
• BRB offers rates beginning at TR + 8.99% annually

Santander acknowledges the likelihood of rate increases while maintaining lending volumes. BRB similarly indicates potential short-term rate adjustments due to macroeconomic changes.

Caixa plans to maintain current rates through 2024’s end, having secured sufficient resources for present demand.

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