Mortgage lending in Brazil set for new record in 2022

Mortgage lending in Brazil set for new record in 2022

On the back of enormous demand, mortgage lending in Brazil set yet another record last year. According to ABECIP, the Brazilian Mortgage Lenders Association, buyers took out loans to the tune of over R$200 billion in 2021, a 60% increase on 2020. And the sector expects similar levels of lending this year.

New record for Brazilian mortgages in 2021

The latest figures released by ABECIP point to an exceptional year for mortgage loans in 2021. Banks and credit entities approved mortgages for 804,300 properties in Brazil between January and November last year. This represents an uptick of 116.9% compared to the same period in 2020.

In terms of mortgage value, homebuyers took out loans that totalled more than R$200 billion last year. The figure represents an increase of 60% on the R$124 billion lent in 2020.

Strong outlook for 2022

Analysts believe that the perspective for this year is equally good since property remains a solid investment. “Despite higher interest rates and inflation, we expect 2022 to be a positive year too,” said Cristiane Portella, President of ABECIP.

She points out that the recent rises in interest rates should not put off prospective homebuyers because the differences are proportional. “Rate rises tend to reduce inflation, maintain purchasing power and add stability, all positive factors for long-term investment,” said Portella. 

Higher volume of loans in 2022

For some experts, there’s a strong possibility that mortgage lending in Brazil will see even higher volumes this year. Marcos Saceanu, President of the Association of Real Estate Executives in Rio de Janeiro (ADEMI-RJ) is one of them. He believes that a repetition of 2021’s figures would be excellent, but he also predicts an increase in lending because of the banks.

“Savings continue to be the main financer of mortgage lending,” he said. “There are excellent opportunities in the market for both the economy and the high-net-worth sector.”

Banks keen to compete for mortgage lending in Brazil

The levels of savings among Brazilian households and the positive long-term outlook for the economy have led many banks to maintain the conditions of their mortgage products. One example is the Santander, whose loan package offers an interest rate of 8.99% a year for a mortgage with 80% loan-to-value for up to 35 years.

According to one market analyst, Brazilian banks are looking to the medium and long term and are keen to remain relevant in the sector. For Caixa, the definition of interest rates depends on the analysis of market factors and varies according to the client’s relationship with the bank.

(Source: ABECIP)