Brazilian mortgage market expects biggest year ever

Brazilian mortgage market expects biggest year ever

Brazil’s real estate sector enjoyed a buoyant year in 2023, and all the signs point to an even busiest one this year. The latest predictions for the Brazilian mortgage market show that loans should reach their highest ever by the end of December.

2023 is the second-highest year on record

The Brazilian Mortgage Association (ABECIP) has just released data for the market last year. The figures reveal that 2023 saw the second-highest levels of loans despite interest rates of over 12% all year.

In 2023, Brazilian mortgages amounted to R$251 billion, 4% more than in 2022. Last year’s loan total is the second highest in history, behind just 2021, when mortgage credit totalled R$255 billion.

Last year, homebuyers took out loans for 994,000 properties in Brazil, a figure just shy of the one million mark.

Biggest year ever for the Brazilian mortgage market

Based on 2023’s loan levels, the ABECIP predicts the mortgage credit total to reach R$259 billion this year. This figure represents a 3% increase on 2023 and would mean a record for the market.

The Association expects much of this growth to come from FGTS loans, which should increase by 8% this year. These loan types are particularly common in the lower property price echelons and include mortgages for social housing within the Minha Casa Minha Vida programme.

“If our predictions are correct, 2024 will be the best year ever for property loans in Brazil,” said Sandro Gamba, President of ABECIP. However, he mentions the caveat that loan levels will depend on the volume of new launches. “We can meet market demand,” he said, adding that the market is growing compared to previous years.

Higher property prices in 2024

ABECIP also made some predictions on the behaviour of the Brazilian property market over the next year. Gamba believes real estate prices will go up during 2024 as there is a margin for them to do so.

He bases this prediction on two main factors: lower inflation and less inventory on the market. Lower inflation increases purchasing power among homebuyers who are more likely to buy a home. As a result, the demand for mortgages would rise.

In addition, Gamba points out that higher demand puts further pressure on supply, reducing inventory levels. Higher property prices are the natural consequence of lower inflation and supply.

(Source: ABECIP)