Home loans lose steam but market rules out new crisis
The faster increase of Brazil’s benchmark interest rate Selic seems to take real estate credit on a collision course against an iceberg of double-digit interest rates, as occurred in past crises. But the story may be different this time. The market is likely to avoid a great impact from the rate shock, specialists told Valor.For now, the roadmap follows the traditional course seen in previous periods of monetary tightening by the Central Bank: banks have increased housing credit rates in tandem with the Selic hikes. According to a survey by MelhorTaxa, an online platform aimed at mortgage rates comparison, the average interest rates on loans for home purchases with funds from savings accounts reached 8.35% per year in November.This is well above the average 6.96% seen from January to June 2021, when the Selic was raised to 4.25% from 2%. From July on, banks started to adjust the rates faster in view of stronger interest rate hikes by the Central Bank. The average went up to 7.43% at the beginning of the second half of the year. In September, it went up again, to 8.15%. In the following month, it reached 8.22%. The basic interest rate is currently at 7.75% a year, but the Central Bank has signaled another 150 basis points increase in December, which would take interest rates to 9.25%.In the Central Bank’s Focus survey to measure economists’ expectations, the median for the Selic rate at the end of the current tightening cycle, estimated to be reached at the end of the first quarter of 2022, is 11.25%. The last time short-term interest rates were at this level, in April 2017, the average rate for housing credit reached 10.63%, according to MelhorTaxa."There was a quick move by banks to raise interest rates and avoid widening the spread between the real estate rate and the Selic," said Paulo Chebat, CEO at MelhorTaxa. "Since September, we have noticed a greater restriction in housing credit, with people unable to get what they would like to finance their desired property," he added.According to the executive, in the third quarter there is already a slight drop in terms of negotiation volume for the purchase and sale of properties. "It is still not something so relevant, but the inclination of the curve is starting to change." The average rate is expected to end the year closer to 9%, Mr. Chebat said. "Some banks are already signaling a new interest rate hike this year."Despite the prospect of an increase, the rates still remain at a...
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