bank of brazil launch home equity programme
News Posted On: 18 October 2010
As the Brazilian housing finance sector continues to show improving signs along with the market, one of the country’s prominent lenders – Banco do Brasil (Bank of Brazil) – has recently started offering homeowners (with a sufficient amount of equity) the option to borrow against their property’s value.
Entitled ‘Crédito Imóvel Próprio’ (Credit for One’s Own House), finance is available at between R$ 100,000 and R$ 500,000. Loans will be given to urban residential properties that have clean title, no associated debt or other encumbrances. Austere banking regulations, introduced during the country’s post hyper-inflationary period, have limited the amount of borrowing to 50 percent against the assessed value of the property – the remainder 50 percent will be used as collateral (strict credit scoring procedures are also being undertaken with applications). Repayment timescales vary and are subject to different rates depending on the terms agreed.
Brazil’s house equity levels are significantly greater than those of many developed countries – largely due to the mortgage market in the country being particularly young as well as the fact that a significant proportion of Brazilians own their property outright (with no associated debts). The Banco do Brasil are expecting these loans to be taken out by homeowners to undertake renovation and/or expansion works; purchase a second property; pay for education and other business related reasons.
Foreign investment specialists are viewing the news as an encouraging sign of the future of the sustainable growth of the home lending market. Whilst indications have yet to appear from the major institutions with regards to housing finance options for overseas buyers, Luis Lessa from the ADIT organisation in a recent interview with the Brazil Real Estate & Land Investment Guide stated: ‘within the year, the credit lending that is currently very apparent in the Brazilian market place will become more restricted – opening up further opportunities for foreign investors.’
Brazil Investment Guide
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