With the Selic rate at 13.75% and accumulated inflation of 3.94% in the last twelve months, the real interest rate held by Roberto Campos Neto is 9.4% per annum.
247 – The Brazilian Association of Real Estate Developers (ABRAINC) issued a statement stressing the importance of lowering the interest rate at the June meeting of the Monetary Policy Committee (Copom) of the Central Bank, as a vital measure for the economic development of Brazil.
According to ABRAINC, Brazil currently has the highest real interest rates in the world. With the Selic rate at 13.75% and inflation accumulated at 3.94% in the past 12 months (IPCA in May), the real interest rate is 9.4% per annum, much higher than the number two, Mexico, at 6.6%. This situation is a major obstacle to investment and undermines job creation in the country, mainly affecting the low-income population.
Real estate financing from the Brazilian Savings and Loan System (SBPE), which uses savings resources and moves about R$180 billion in 2022, is strongly affected by the high Selic rate of 13.75%. This makes the purchase of real estate unaffordable for thousands of families, hurting the performance of a sector responsible for 10% of formal jobs in Brazil.
A concrete example of how high interest rates affect real estate financing is that a family with an income of up to R$10,000.00, who previously could have a financed property worth R$470,000.00, can now only acquire a property of up to R$370, 000.00 Brazilian Real. Higher interest rates have increased finance premiums by a staggering 23%.
Maintaining the Selic rate at 13.75% has also been identified as responsible for the increase in corporate defaults. Currently, according to Serasa, there are 6.5 million negative companies. In addition, there was a 40% increase in corporate cases undergoing judicial recovery and a 30% increase in bankruptcy cases.
Follow up on recommendations
Finally, ABRAINC notes that current government interest spending is sufficient to build 3 million new affordable housing units, which would significantly reduce the housing deficit of 7.8 million homes.
The association stresses the urgency of a significant reduction in the Selic rate as a means of promoting economic growth, encouraging investment and promoting job creation. ABRAINC expects Copom to consider this information and take appropriate measures to promote a significant reduction in interest rates, with the aim of sustainable development of the country.
Charlotte Whitmore is a contributor at Mediarunsearch.co.uk, covering a broad range of topics including news, politics, business, technology, sport, entertainment, and lifestyle. She focuses on delivering clear, balanced reporting and practical information that helps readers stay informed about current events and emerging developments. Her work highlights stories that matter to everyday audiences, with an emphasis on accuracy, relevance, and accessible journalism that keeps readers connected to the issues shaping the UK and beyond.