the lines of real estate credit post-fixed, linked to the official indicator of inflation (IPCA) and the Savings account, had a chicken flight. Loans in these modalities were launched with prominence in 2019 and even showed promising growth in the first two years, but now they have run out of steam in the face of fees and rising inflation.
Real estate financing adjusted by the IPCA reached R$1.2 billion per month over the past year. With the shaking of the economy, this volume dropped to the level of R$ 300 million at the end of the first semester, according to data from central bank. And the bias is bearish. The institution does not have specific data on credit lines adjusted by savings.
The launch of the IPCA modality took place in 2019, in a ceremony attended by the president Jair Bolsonaro, the president of Box, Pedro Guimaraes, and an audience full of political leaders and real estate entrepreneurs. The state bank was a pioneer in adopting the line, with rates in the order of 3% to 5% per year, plus the IPCA. The lines in force until then had interest close to 8.5% per year plus the Referential Rate (TR). There was, therefore, a considerable reduction in the initial portion for consumers, as inflation was at a low level, stimulating purchases and sales of properties – although in higher risk contracts.
The following year, in 2020, it was time to launch real estate credit adjusted by the remuneration of savings. Here, the pioneer was the Itaú Unibanco, soon followed by other institutions. This modality is considered less risky for borrowers, since the readjustment for savings has a limit, unlike inflation. Just remember the rule: If the Selic is less than or equal to 8.5%, the savings yield is 70% of the Selic + TR. If the Selic exceeds 8.5%, the passbook’s yield locks at 0.5% per month + TR.
“We understand that these lines are here to stay. They played an important role in the diversification of products on the market”, says the executive director of the Brazilian Association of Real Estate Credit and Savings Entities (Abecip), Philip Punctual. “But it is natural that, depending on the situation at the moment, they will be more or less attractive.”
The president of the consulting company Melhor Taxa, Paulo Chebat, says that the emergence of these lines represented an innovation, with new financing possibilities according to the profile of each consumer. But adherence was never really high.
While the line linked to the IPCA reached BRL 1.2 billion per month at its best moment, the traditional modality, linked to the TR, turned over between BRL 14 billion and BRL 17 billion per month. “Given the macroeconomic instability, most customers prefer TR’s greater predictability,” says Chebat. “As we have a history of inflation and high interest rates, clients understand that these lines have a greater risk”.
The materialization of the risk will now be a reason for monitoring with a magnifying glass by analysts. The question is about the levels of default going forward in post-fixed portfolios, since debts will weigh more on the already pressured household budget.
Although there is a potential risk of defaults rising in some banks’ post-fixed portfolios, the chance of this wreaking havoc on the financial system as a whole is remote, precisely because these lines have grown little so far. “Today, the stock of credit linked to the IPCA is something around 2% of the total mortgage credit in the national financial system. It is still a low exposure”, say Hebbertt Soares and Juliana Cantero, directors of structured finance at Fitch Ratings.
It is also worth remembering that, in 2019, when credit with IPCA was launched, there was great expectation that banks would securitize customer receivables, expanding their sources of funds. But that didn’t take off either.
“US U.S and on Europe, securitization has a lot of origin in financing modalities indexed to market indicators. In Brazil, it has never been a great asset for this, because the vast majority of operations are linked to the TR. The IPCA and Savings lines could theoretically reduce this mismatch. But from a risk analysis standpoint, it is still necessary to understand how these portfolios will behave over time to provide more security to investors,” say Fitch professionals.