Growth in Brazil mortgage loans to slow this year -industry group

Reuters

By Marcela Ayres and Guillermo Parra-Bernal

SAO PAULO, Jan 21 (Reuters) - Mortgage loan disbursements are expected to rise 15 percent this year, about half the pace observed in 2013, with home prices also losing steam after years of steep increases, an industry group said on Tuesday.

Local financing for home purchases soared 32 percent last year to an all-time high of 109.2 billion reais ($46 billion), Abecip, the group representing mortgage lenders, said in a statement. In December alone, loans extended to home buyers rose 17 percent on an annual basis, the group said.

About 529,800 home units were sold last year using credit, or 17 percent more than in 2012, with house prices rising more than twice as fast, Otavio de Lazari Junior, Abecip's president, said in a news conference.

While prices will keep rising, "the pace of increase is unlikely to accelerate" in coming months, Lazari said. Prices rose last year partly due to a shift in the profile of new projects - some of which included more leisure areas, - and a decision by homebuilders to pass through rising costs, he said.

The data underscore a trend of moderation in a market that, for the previous five years, was Brazil's fastest-growing lending segment. In the last months of 2012 and throughout the first half of last year, mortgage loan disbursements cooled in the wake of a jump in consumer debt levels, an economic slowdown and the beginning of a cycle of interest-rate hikes by the central bank.

According to Lazari, inflation-adjusted housing prices in Brazil surged 55 percent in the past decade. He rejected the view that Brazil's real estate market is experiencing a price bubble - an assertion made by several analysts including Yale University Professor Robert J. Shiller, a Nobel Prize winner in 2013 who predicted the collapse of the U.S. housing market.

FAVORITE SEGMENT

Mortgage loans are a favorite segment of state-run and private-sector banks because, as opposed to most consumer credit, borrowers have to put up their homes as collateral. Mortgages represent about 7 percent of Brazil's outstanding credit, compared with less than 2 percent a decade ago, according to central bank data.

State-run Caixa Econômica Federal is Brazil's largest mortgage lender with about two-thirds of the market. Housing loans at the Brasilia-based lender rose about 40 percent last year, executives told Reuters recently.

Data from other research institutes validate Lazari's assertion that prices are losing momentum in a gradual manner.

Home price rises in Brazil's 16 largest metropolitan areas are clearly on a slowing trend, while public data might be masking further weakness in some housing segments, Deutsche Bank Securities analysts said in a report on Wednesday.

Last year, the average price per square meter hit 7,815 reais in São Paulo, Brazil's most populous city, and 9,937 reais in Rio de Janeiro, amounting to an average 13.5 percent annual increase, the Deutsche Bank report said, citing data from a survey conducted by the University of São Paulo and real estate website Zap Imóveis.

Prices rose at an annual average of over 20 percent between 2008 and 2012, according to the Fipe-Zap index.

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