Third-best year ever for Brazilian mortgage market

Third-best year ever for Brazilian mortgage market

Despite higher interest rates, the Brazilian mortgage market registered its second-best results last year. Loans fell by just 5% compared to 2021, although those for civil construction soared by 10%. For 2023, analysts predict similarly buoyant levels and forecast it will be the third-best year on record.

Brazilian mortgage market booms in 2022

The latest data for the Brazilian mortgage market reveal that loans continued on their upward trajectory last year. According to the mortgage association ABECIP, mortgages totalled R$241 billion in 2022. The figure falls 5% below loans in 2021 but still represents the second-best year on record.

Loans for civil construction, however, rose for the fifth consecutive year, with banks lending R$44.9 billion in 2022. The figure is 10% higher than in 2021.

According to ABECIP President, José Ramos Rocha, the share of civil construction’s contribution to Brazil’s GDP in 2022 reached 7%. He described the figure as proof of the sector’s “robust growth”.

Sales of new properties soar in 2022

New-build projects make up the principal engine driving civil construction in Brazil, and they enjoyed an exceptional year in 2022. Sales rose by 12.2% between January and December, compared to the same period in 2021.

Some 146,412 units changed hands in the first 11 months of the year. This figure is already 1.9% higher than the total for 2021, indicating that 2022 will be a record year for new build sales in Brazil.

“Sales volumes have been very high over the last few years,” said Rocha, “so inventory levels are low.” As a result, ABECIP expects more new projects in 2023, given the country’s housing shortage.

Fortaleza market skyrockets

The national figures hide regional differences, and many cities in Brazil saw even higher sales. Fortaleza in Northeast Brazil is one such example. In the capital of the state of Ceará, sales totalled R$4.8 billion in 2022. The figure translates to a 67% increase on 2021.

Of the 8,826 transactions, around 27% were properties in skyrises. The total value of their sales reached R$2.1 billion, almost half the result for the city. Civil construction in Ceará experienced a strong year in 2022.

The mortgage market in 2023

As was the case worldwide, interest rates in Brazil rose last year. In their latest meeting, experts at the Brazilian Central Bank opted to keep the Selic rate at 13.75% for the immediate future. However, market analysts believe the rate will fall gradually this year and probably end 2023 at around 12%.

Despite higher interest rates than a year ago, ABECIP is still optimistic for the Brazilian mortgage market in 2023. Their President predicts the third-best year ever, after the record in 2021 and near record in 2022. He bases his forecast on pent-up demand in the market, whose supply still lies below the levels needed to meet this demand.

(Source: ABECIP)