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Banks (Finance)

Brazil's Housing Finance Shifts as Savings Deposits Decline

Strategic Insights

— 2 min read

The decline in savings deposits has led banks in Brazil to prioritize individual borrowers, diverting funds from property developers who are now forced to seek alternative financing structures.

The trend, which began gradually a few years ago, has accelerated recently, with construction loans accounting for just 11% of the R$51 billion in mortgage credit operations using savings deposits between January and April of this year. This is the lowest share since the 2002 data series began, according to the Brazilian Association of Real Estate Credit and Savings Entities (ABECIP). The share of construction loans in mortgage credit operations has been declining since 2016, when it peaked at 59% in 2005.

Key Takeaways:

  • Construction loans accounted for just 11% of the R$51 billion in mortgage credit operations using savings deposits between January and April of this year, the lowest share in the data series since 2002.
  • The share of construction loans in mortgage credit operations has been declining since 2016, when it peaked at 59% in 2005.
  • The trend has accelerated recently, with individual loans rising 20.4% to R$45.25 billion, while financing for construction plunged 48.6% to R$5.7 billion.
  • Banks are diverting funds from property developers, who are now forced to seek alternative financing structures, such as real estate funds and instruments such as real estate receivables certificates (CRI).
  • Developers will be able to seek out the structure that best suits their needs, such as real estate financing tied to the CDI (Interbank Deposit Certificate) rate.
  • Banks, such as Santander, have been reserving savings deposits for individual borrowers, while others, like Caixa, are prioritizing individual borrowers due to the scarcity of funding.
  • The housing market must prioritize individual borrowers because that is essential to making projects viable, and developers will suffer if individuals have to pay more.

Statistics:

  • R$51 billion in mortgage credit operations using savings deposits between January and April of this year.
  • Construction loans accounted for 11% of R$51 billion.
  • Construction loans plummeted 48.6% to R$5.7 billion.
  • Individual loans rose 20.4% to R$45.25 billion.
  • Savings accounts posted R$38.9 billion in net outflows in the first four months of this year.
  • Nearly 40% of housing finance was funded by savings in 2022, but that share fell to 32% in 2024.
  • ABECIP reported 59% of mortgage credit operations were funded by construction loans in 2005.

Sources:

  • Valor analysis of figures from the Brazilian Association of Real Estate Credit and Savings Entities (ABECIP)
  • Interview with Sandro Gamba, president of ABECIP
  • Interview with Paulo Duailibi, head of real estate business at Santander
  • Interview with Inês Magalhães, Caixa's vice president of housing
  • Interview with Marcos Brasiliano, Caixa's vice president of finance
  • Interview with Bruno Bianchi, commercial director for real estate at Itaú BBA

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