Increase in Selic raises interest on real estate financing

With the rising high of the basic interest rate, financing became much more expensive. Check out some tips from the experts.

Estimated reading time: 4 minutes

From 2020 to 2022, the basic Selic interest rate ranged from 2% to 13.25%. Brazilians who financed real estate two years ago may have saved a significant amount in interest, because the rate was at its historic low, which represented a CET (Total Effective Cost) of 7% per year, on average.

The expressive change in the Selic raised the total costs of financing, which currently charge an average of 9.8% per year from the contracting parties. This 2.8% increase in CET means that in the case of properties worth R$ 250 thousand, for example, a difference of R$ 68 thousand in interest is added.

In more expensive properties, such as R$500,000 and R$1 million, the additional interest is R$137,000 and R$300,000, respectively. Today, those who finance a property pay 20% more compared to 2020.

According to consultants, the CET should be even higher. What prevented this rise was competition between banks with the arrival of fintechs in the financial market, which offer lower interest rates.

In addition, the real estate market rate does not move at the same rate as the Selic, despite being guided by it. Default risk is also a significant factor that makes up the CET rate.

What is CET?

The Total Effective Cost contains all charges, taxes, fees and expenses of a financing. It serves as a basis for informing all the costs that the buyer will incur when financing.

All companies are required to inform the value of the CET in the contract.

What do the experts say?

In this sense, experts do not recommend real estate financing at times of high interest rates, such as the current one. The best thing to do is wait for the Selic rate to start dropping. According to the latest data from the Focus Bulletin, this should only occur from 2024 onwards.

For consultants, the best thing to do is to take advantage of these two years to increase the reserve value, apply the money in fixed income to have a greater value for entry in 2024. A good investment option is the Selic Treasury, which offers liquidity and pays the interest variation for the period.

Attention to funding

For Brazilians who cannot wait for the Brazilian economic scenario to improve, there are some aspects that demand more attention in relation to financing. The most important thing is that, before financing a property, it is essential to be sure that the installments will be paid.

A real estate loan cannot commit more than 30% of the family’s monthly income, by definition of the Income Commitment Law. When the installments are within this percentage, it is also necessary to consider other expenses and debts, so that they do not exceed the value and compromise the family’s income.

Another important factor that must be taken into account is the index by which the installments will be readjusted. The most common rates in these cases are the Reference Rate (TR), Broad Consumer Price Index (IPCA) and General Price Index – Market (IGP-M). The amount to be paid at the end will consist of the CET and the correction index.

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Image: Andrey_Popov /

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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