An expected decline in Brazil's benchmark Selic rate could allow mortgage lending in the country to remain stable or increase slightly in 2017 following two consecutive years of contraction, O Estado de S. Paulo reported, citing Gilberto de Abreu Duarte Filho, the president of local mortgage lenders association Abecip.

According to Duarte Filho, mortgage lending in Brazil is expected to total between 45 billion Brazilian reais and 50 billion reais in 2017, compared to a projected 45 billion reais figure for 2016.

"From the second half of 2017, the benchmark interest rate will be close to 10% per year," the official was quoted as saying. "Thus, the market could see more availability of funds for financing, with lower interest rates."

Duarte Filho also noted that a lower Selic rate will once again make savings deposits attractive, helping to ease funding pressure that has been created by a high pace of savings withdrawals in 2015 and 2016.

Mortgage loans financed through savings deposits in Brazil totaled 37.2 billion reais in the first 10 months of 2016, down 44.2% from the year-ago period. Mortgage disbursements in 2015 fell 33% from the previous year, the publication reported.

As of Dec. 9, US$1 was equivalent to 3.36 Brazilian reais.