Brazilian mortgage lending reaches R$17 billion in May

Brazilian mortgage lending reaches R billion in May

Brazilian mortgage lending registered its second-best May on record with loans totalling over R$17 billion. The figure is almost 50% more than April and the highest so far this year. Compared to the previous 12 months, home loans have risen by 18% in the year.

Second-best May ever

Despite the global headwinds and higher interest rates, Brazilian mortgage lending continues to register buoyant figures. According to the latest statistics from the Brazilian Mortgage Association, ABECIP, those for May reached over R$17 billion, the second-highest figure for this month on record.

Home loans posted their highest figure of the year in May and a 49.2% increase compared to April. In annual terms, however, May mortgage statistics were slightly below those for 2021, decreasing by 2.5%.

Almost R$70 billion in loans this year

During the first five months of 2022, buyers took out loans to the tune of R$69.65 billion in Brazil. The figure is 10% below the same period in 2021.

In yearly terms, from June 2021 to May 2022, lending has risen by 18% compared to June 2020 to May 2021. In the 12 months to May this year, Brazilian mortgage lending equated to over R$197.68 billion.

Brazilian banks approved mortgages for 72,700 units in May, up 58% on April. As was the case in value terms, the unit total stood slightly below (2.1%) the same month last year.

Boom in off-plan lending

May figures also showed a sharp uptick in mortgages for properties under construction. Although finished homes continued to take the lion’s share of loans, new construction registered its best month so far this year and since August 2021.

A total of 30,206 off-plan units were financed in May, representing around 42% of the market. The figure was the highest so far this year and 42.6% more than May 2021. It illustrates the current demand for new properties in Brazil.

Strong lending despite higher interest rates

Brazilian mortgage lending in 2022 appears to be mirroring that in 2021, despite considerably higher interest rates. In May this year, the SELIC benchmark rate stood at 13.25%, almost 10% more than in May 2021 when it was 3.5%.

The Brazilian Central Bank has been steadily increasing base interest rates since late last year in an attempt to bring inflation into check. The rate hikes have not deterred buyers, however, as the latest figures for mortgages show.

The strong underlying demand in the market and favourable loan packages from Brazilian banks continue to drive the market. Demand is particularly acute in Northeast Brazil where 40% of consumers are looking to buy a home.

(Source: ABECIP)