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Brazil Recession to Fuel Higher Mortgage Defaults, Moody's Says

  • Economic woes to lead to higher delinquencies, payment delays
  • Higher borrowing costs to weigh on demand until mid-2017

Brazilian banks will write fewer mortgages this year as delinquency rates climb amid the country’s worst recession in more than a century, according to Moody’s Investors Service.

State-owned lender Caixa Economica Federal, which issues almost three-fourths of housing loans in Brazil, also faces higher financing costs, imperiling its ability to write new mortgages, Moody’s said in a report. Lower household income and higher costs for credit will weigh on demand for houses at least through mid-2017, the report said.