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If you thought that financing a property in Brazil was already complicated, get ready! The new rules from Caixa Econômica promise to change the scenario and, of course, make purchasing your own home a little more challenging. Starting November 1st, the state-owned bank, responsible for around 70% of financing in Brazil, will implement a series of changes that will increase the down payment required for those who dream of moving out of rented accommodation.
The main change coming with the new Caixa Econômica rules involves an increase in the down payment on financing. If previously, with the Constant Amortization System (SAC), the buyer had to pay 20% of the property value, now, this percentage has increased to 30%. In the Price system, the change is even more radical, with the down payment increasing from 30% to 50%.
These changes are directly linked to the need to adapt to the current economic scenario, which includes the constant increase in the Selic, the basic interest rate. The increase in the Selic, currently above 10%, puts pressure on the entire real estate credit market, causing banks to adjust their conditions to keep up with the cost of money.
But Caixa Econômica's new rules do not only apply to the bank
Other major players in the sector, such as Itaú, Bradesco and Santander, are also reviewing their rates. Itaú, for example, has already increased its average rate, which is now 10,79% per year, plus the Reference Rate (TR). Bradesco, in turn, is “evaluating” possible adjustments, while Santander, in a statement, has already said that the increase in rates is a trend, given the long-term interest rate scenario.
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What will financing be like in Brazil after the changes?
These new rules from Caixa Econômica may make access to credit for purchasing property even more difficult, especially for families that depend on financing in Brazil to make their dream of owning their own home come true. With the higher down payment required, real estate financing will require even more robust financial planning on the part of buyers.
According to the Brazilian Association of Real Estate Credit and Savings Entities (Abecip), real estate credit in Brazil is expected to total R$270 billion in 2024, with a significant increase already recorded in the first half of 2023. However, even with this growth, the cost of credit is increasing, due to the rise in the Selic rate and the drop in fundraising through savings, a traditional source of financing.
Sandro Gamba, president of Abecip, had already warned that the situation is likely to continue to get more complicated, especially after Resolution 5.119 of the National Monetary Council (CMN), which extended the liquidity term of Real Estate Credit Letters (LCI). This is likely to put even more pressure on financing in Brazil.
Alternatives to traditional financing
Faced with the difficulties imposed by Caixa Econômica's new rules and the increase in interest rates, many consumers are seeking alternatives to overcome the high cost of real estate credit. According to Fabio Louzada, financial planner and founder of Eu me banco, options include real estate consortiums and property auctions.
“A consortium can be interesting for those who are not in a hurry to buy a property. Auctions offer the possibility of buying with up to 50% discount, but you need to be careful with details, such as condominium fees and property tax, which can end up being more expensive than the value of the property itself,” warns Louzada.
These options, although viable, require attention to contractual details and meticulous financial planning, especially in the case of auctions, which involve specificities such as the settlement of outstanding debts on the property purchased.
New rules from Caixa Econômica impact thousands of people
The new rules of Caixa Econômica promise to touch the pockets of those who want to buy a property. With the increase in required down payments and rising interest rates, real estate financing will become more expensive and the dream of owning a home will become more distant for many Brazilians. Meanwhile, alternatives such as consortiums and auctions are emerging as options, but not without risks.
Now, more than ever, it is essential that anyone who wants to buy a property is aware of credit conditions and carefully evaluates the right time to close a deal. After all, every real saved makes a difference in this challenging financing scenario in Brazil.
