Major Brazilian Banks Raise Mortgage Rates and Tighten Lending Requirements
Brazilian banks have started increasing mortgage rates and implementing stricter lending conditions as the Central Bank raises basic interest rates (Selic). Itaú Unibanco led this trend by raising its average annual rate from 10.49% to 10.79% in early October.
Caixa Econômica Federal, which handles 70% of Brazil‘s mortgage lending, maintains current rates but will increase down payment requirements starting November 1st.
The SAC payment system will require a 30% down payment instead of 20%, while the Price system increases from 30% to 50%.
Banks face depleting savings account resources traditionally used for mortgage funding. This shortage forces them to seek alternative funding sources directly affected by Selic rate changes.
The mortgage market shows unexpected vigor, with lending reaching R$118.5 billion ($21.16 billion) in the first eight months of 2024. This represents 17.6% growth compared to the same period in 2023.
Here are the current mortgage rates at major Brazilian banks:
Caixa Econômica Federal offers rates from TR + 8.99% to 9.99% annually
Itaú Unibanco starts at TR + 10.79% annually
Bradesco begins at TR + 10.49% annually
Santander ranges from TR + 10.99% to 12.99% annually
Banco do Brasil starts at TR + 10.29% annually
BRB offers rates beginning at TR + 8.99% annually
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Caixa Econômica Federal (CEF) - a bank with a rich history in Brazil. Here's a brief overview:
Early years (1846-1903)
Caixa Econômica Federal was founded on May 14, 1846, as the "Caixa Econômica de São Paulo" (Economic Savings Box of São Paulo) with the goal of providing savings services to the population of São Paulo, Brazil.
Initially, the institution was a small savings box where people could deposit coins and banknotes to earn interest. Over time, the bank expanded its services to include loans, deposits, and other financial activities.
National Expansion (1903-1946)
In 1903, the Caixa Econômica Federal was transformed into a federal institution, and its scope was expanded to the entire country. The bank began to accept deposits from aLL regions of Brazil, and its services were standardized to provide a more comprehensive range of financial products to the population. During this period, CEF played a crucial role in the economic development of Brazil, providing financial services to the government, businesses, and individuals.
Modernization and diversification (1946-1988)
After World ⇪ II×, Caixa Econômica Federal underwent significant modernization efforts, introducing new technologies and financial products. The bank expanded its operations to include credit, investments, and insurance services. In 1964, CEF became a commercial bank, and its scope was further expanded to include corporate and international banking.
State Bank and Nationalization (1988)
In 1988, the Brazilian government nationalized Caixa Econômica Federal, and it became a state-owned bank, known as Caixa Econômica Federal. The nationalization process aimed to increase state control over the economy and provide financial services to the broader population. As a state-owned bank, CEF was tasked with promoting economic development, social justice, and financial inclusion.
Modernization and Reforms (1990s-Present)
In the 1990s, Caixa Econômica Federal underwent significant modernization efforts, introducing new technologies and financial products. The bank expanded its operations to include digital banking, mobile banking, and online services. In 2015, CEF was restructured to become a specialized financial institution, focusing on social and economic development programs, such as microfinance, microinsurance, and education financing.
Today, Caixa Econômica Federal is one of the largest banks in Brazil, with over 5,000 branches and 12,000 ATMs across the country. The bank serves over 20 million customers and has a significant presence in the Brazilian economy, providing financial services to individuals, businesses, and institutions.