Brazil's Itaú Unibanco has announced an increase in its mortgage interest rates, effective for loan proposals submitted from October 10, 2024. The bank's mortgage portfolio stood at R$ 114.6 billion at the end of Q2 2024.
This increase, applicable only to residential properties, reflects a tightening credit environment as banks become more selective in lending due to reduced available resources. Experts, including Alberto Ajzental from FGV-SP, indicate that the rising costs of financing and construction have further widened the gap between income and property values.
Economists anticipate another monetary tightening cycle in Brazil, with the latest Focus Bulletin projecting the Selic rate at 11% by year-end. However, some institutions foresee even higher rates. Itaú's chief economist, Mario Mesquita, has recently adjusted expectations, predicting a Selic increase to 12%.
Ajzental notes that a 2.2 percentage point rise in the Selic typically leads to a 1% increase in mortgage rates. However, he also points out that once the Selic exceeds 8.5%, the correlation between rising rates and mortgage costs becomes less direct, influenced by the returns on savings accounts, a traditional funding source for middle-class home financing.