SAO PAULO/BRASILIA (Reuters) - Brazil’s National Monetary Council (CMN) on Tuesday raised the price threshold of homes eligible to be financed by a worker severance fund to 1.5 million reais ($400,000), in a move that may benefit the country’s largest homebuilders.
The increase from the current cap of 950,000 reais comes in addition to other changes in regulations. Industry groups such as Abrainc, an association of homebuilders, expect the new regulation to bring an additional 80 billion reais to the pool of funds available to finance homes in the country.
The workers severance fund FGTS offers home loans as one of several ways it invests money and generally offers lower rates than regular loans.
Brazilian homebuilders are in the midst of recovering from a drop in demand during Brazil’s deepest recession in generations.
“The new threshold will allow companies to sell current inventory, easing new launches,” said Luiz Antonio França, head of Abrainc.
Celso Petrucci, chief economist for the real estate industry group Secovi, said the new regulations were expected to help raise activity in the sector.
BTG Pactual analysts said in a note to clients the decisions will benefit mainly upscale homebuilders, such as Cyrela Brazil Realty SA (CYRE3.SA) and Even Construtora e Incorporadora SA (EVEN3.SA), which are dealing with high inventories.
Reporting by Gabriela Mello, Marcela Ayres and Aluisio Alves; editing by Jonathan Oatis and Marguerita Choy