The Brazilian mortgage market grows – good news for Investors.
While it is universally agreed that the property market in Brazil is booming, the availability of mortgage finance have previously proved problematic in the country and that is now set to change. For far too long the lack of finance available to millions of people in Brazil has meant that home ownership has been out of reach but with the current economic stability in the country, things are changing. Caixa, the largest provider of mortgages in Brazil with an estimated 75% of the market share, increased their mortgage lending by over 50% between 2009 and 2010 and the trend is continuing through 2011.
Mortgage debt has been low in Brazil for a long time, comprising only 4% of the GDP last year and Banks tend to only lend at 60 – 80% of the property value rather than the 90 - 100% loans that countries like the UK have previously offered. Brazil’s mortgage rates have always been high but are lowering now in response to this trend.
Despite the rise in mortgage availability, rental rates are still predicted to grow throughout 2011 as all aspects of the Brazil property market continue to grow. This is all good news for investors who often wish to buy properties to rent out but also re-sell at a later date- increasing mortgage finance means increasing numbers of able buyers. Brazilian mortgages are even set to be offered to foreigners in the near future which can increase investor options significantly.
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