Understand how Selic directly impacts the purchase of a property
In recent years, the consecutive Selic cuts have reflected in the growth of real estate financing. The drop in interest rates has encouraged people to invest in buying a property.
The real estate sector takes advantage of the drop in Selic to offer mortgages at lower interest rates. Here, in this article, we are going to show how Selic has a direct impact on real estate purchases.
How does the Selic rate impact investments in real estate?
Selic is the basic interest rate of the Brazilian economy. This index is used as a reference by financial institutions to define the rates of operations, such as real estate financing.
The Copom (Committee of Monetary Policy of the Central Bank) made cuts in the Selic in order to force the fall of interest rates and, thus, stimulate consumption by reducing the value of credit. Thus, more people tend to seek loans and financing.
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Decrease in interest
A lower interest rate is the main incentive that Selic cuts can bring to home financing. Banks and finance companies tend to lower mortgage rates and open up the range so that more people can fulfill their dream of owning a home.
With the low Selic, builders tend to build more properties, and financial institutions facilitate financing with lower interest rates. In addition to financing, Selic impacts consortia, which tend to reduce administrative fees.
Release of credit lines
Throughout the year, the federal government released around R$43 billion in credit lines through Caixa Econômica Federal. With the Selic reduced, the financing of high-end properties becomes more viable.
With the ease of obtaining credit lines from public banks, consumers can lose the fear of betting on financing. This also stimulates the generation of jobs in the civil construction sector, directly influencing the creation of new jobs and the maintenance of existing vacancies.
A low Selic may reduce the advantages of buying in cash. If you are looking to finance a property, the low Selic rate can bring you good advantages, which does not happen for those who want to buy a house in cash.
Generally, with the Selic at low, as it happens at the moment, the financing has more advantageous conditions, and the construction companies prioritize this modality in comparison with the cash sales. That's because lower interest rates are advantageous for consumers.
In an inverse moment, when the Selic is high, higher interest rates make financing less attractive, and this causes builders to reduce property prices in cash purchases to continue stimulating sales.
How does Selic influence government housing programs?
According to data released by the Minha Casa, Minha Vida program, for every 1% less in the loan interest rate, more than 2.8 million people can buy a property. In other words, the low Selic rate can help low-income families realize their dream of home ownership.
In general, in housing programs such as Minha Casa, Minha Vida and Casa Verde e Amarela, announced by the government to replace the first mentioned project, the Selic rate does not directly influence the definition of interest rates.
This happens because, in these programs, the interest rate conditions are different, being defined according to the family income, that is, the lower the income, the lower the rate, and vice versa.
Selic can greatly favor the financing of properties, presenting advantages in different cases. When it's low, it helps to lower interest rates. When it is high, it facilitates the purchase of a property in cash.