Brazil’s national monetary council increased the amount of money Brazilians can use to purchase homes from funds set aside in the government’s compensation fund for workers to help offset rising housing costs.
Brazilians can now tap the fund, known as the FGTS, to purchase properties worth as much as 750,000 reais ($339,000) in Sao Paulo, Minas Gerais and Rio de Janeiro states, plus the Federal District, and 650,000 reais elsewhere. The council raised the limits from 500,000 reais due to higher construction prices, according to Julio Carneiro, the central bank’s deputy head of financial system regulation.
“Real estate credit will not have a boom with this measure,” Carneiro told reporters in Brasilia. “It is going to maintain its trajectory.”
Brazil’s annual inflation rate has twice breached the top of the central bank’s target range this year. While consumer prices have since cooled, policy makers have pursued the most aggressive monetary policy of major economies tracked worldwide by Bloomberg.
Consumer prices rose 5.93 percent in the year through mid-September, while the central bank targets an annual rate of 2.5 percent to 6.5 percent.
The average cost of construction materials per square meter rose 3 percent in the year through August, more than double the pace of the prior 12 months, according to data from the national statistics institute.
The increase in the FGTS limit had been requested by non-government banks aiming to stimulate the mortgage sector, newspaper Estado de Sao Paulo reported this year. The last adjustment to the limit was in April 2009, Carneiro said.
The monetary policy council is made up of the central bank, the Finance Ministry, and the Budget and Planning Ministry. Companies feed the FGTS fund with about 8 percent of workers’ salary every month, and workers receive the funds when they lose their job.