The Minister of Finance, Fernando Haddad, announced this Wednesday (27) that the government is preparing a package of measures to unlock real estate credit offered by banks in the country.
The measures, according to Haddad, should be announced at the beginning of April. The minister assessed that this market is more developed in other nations.
“We are going to take measures next week that will unlock this real estate market. We are going to create a very robust secondary market for real estate securities to make real estate credit circulate in Brazil and can be multiplied many times over. It could be ten times more real estate credit in some countries than in Brazil. So imagine the growth potential of the Brazilian economy from civil construction”, said Haddad, in an interview with Itatiaia radio.
According to the Minister of Finance, the idea is to allow banks to sell real estate financing contracts that are in their portfolio, classified as “receivables”, to third parties.
By passing these contracts on to other institutions, banks open up space on their balance sheets to release new real estate financing.
According to him, this type of mechanism is common throughout the world, but rare in Brazil. “So, we are going to do this and this will greatly boost civil construction in Brazil”, he declared.
“It’s a technical issue that’s a little boring to address because it’s very specific, but in Brazil you don’t have as robust a credit market as you have in the developed world. In the developed world, the receivable with property guarantee is a receivable that is sold on the market very naturally”, he explained.
“Let’s assume that the bank sold a house in installments with the property’s guarantee to whoever. This bank asset, this bank receivable, has a very robust secondary market in the developed world. It does not remain in the bank’s portfolio. The bank soon resell and make room on your balance sheet to finance another property”, he said.
Sales of new properties grow in Brazil; much of it driven by smaller apartments
Minister Haddad also stated that he recently met with representatives of the real estate sector to develop this product, and stated that the proposal was received with “very great enthusiasm”.
“So I think that the middle class, the working class, will have news, good news to celebrate in the near future with the issuance of this measure, possibly at the beginning of April, starting next week”, he concluded.
The Minister of Finance did not detail how this transfer of assets (receivables) between financial institutions will be regulated and whether “leveraging” of these assets in the futures market (derivatives) will be permitted.
Tags: Government prepares package multiply real estate credit country Haddad Economy
