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FGTS threshold to finance homes increased to 1.5M reais

August 6 2018

Brazil’s National Monetary Council (CMN) raised the price threshold of homes eligible to be financed by a worker severance fund to 1.5 million reais, 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.

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