Mortgage reforms boost Brazil property
Monday, October 13, 2008
The steady growth of the Brazilian economy means property prices are likely to carry on rising, a market expert has said.
According to The Motley Fool, the average mortgage in Brazil covers just 60% of the value of the home, compared with 90% in US. This means less risk for lenders who would therefore be more likely to lend. Interest rates in Brazil have plummeted from 25 percent in 2003 to 11.5 percent in 2007, which is mainly due to its raw material export-driven economy and huge trade surplus. According to Brazilian Association of Real Estate and Savings Institutions (Abicep), Brazilian mortgage reforms in 2005 are paying dividends today in the solidity and growth of the country's property market. The government has introduced a set of reforms aimed at increasing liquidity in the debt capital markets.
The reforms are aimed at the country's long-term economic growth as well as increasing its gross domestic product. The clear objective of the government is to broaden access of housing to the middle and lower middle class by promoting private sector participation in mortgage lending, encouraging institutions that supports secondary mortgage market and reforming public agencies involved in mortgage lending. The president also announced the "growth-acceleration package." which includes housing and infrastructure investment of US$236 billion.
With Brazil has become one of the top market destinations for overseas property investment, the increase of more sturdy domestic demand is also stimulating property prices. Consequently, with interest rates likely to decline even further, Brazil's "competitive currency" and the transformation of the mortgage process, Brazil's housing market seems set for a vibrant future.
Social BookmarkingAccording to The Motley Fool, the average mortgage in Brazil covers just 60% of the value of the home, compared with 90% in US. This means less risk for lenders who would therefore be more likely to lend. Interest rates in Brazil have plummeted from 25 percent in 2003 to 11.5 percent in 2007, which is mainly due to its raw material export-driven economy and huge trade surplus. According to Brazilian Association of Real Estate and Savings Institutions (Abicep), Brazilian mortgage reforms in 2005 are paying dividends today in the solidity and growth of the country's property market. The government has introduced a set of reforms aimed at increasing liquidity in the debt capital markets.
The reforms are aimed at the country's long-term economic growth as well as increasing its gross domestic product. The clear objective of the government is to broaden access of housing to the middle and lower middle class by promoting private sector participation in mortgage lending, encouraging institutions that supports secondary mortgage market and reforming public agencies involved in mortgage lending. The president also announced the "growth-acceleration package." which includes housing and infrastructure investment of US$236 billion.
With Brazil has become one of the top market destinations for overseas property investment, the increase of more sturdy domestic demand is also stimulating property prices. Consequently, with interest rates likely to decline even further, Brazil's "competitive currency" and the transformation of the mortgage process, Brazil's housing market seems set for a vibrant future.
Labels: Economy, Mortgage, Property-prices
