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Brazil's Caixa to launch fixed-rate mortgages, urges others to follow suit

Brazil's state lender Caixa Econômica Federal plans to begin offering fixed-rate mortgages by June 2020, President Pedro Guimarães said, according to a Valor Econômico report.

The executive said other banks should also offer such products, which are common in much of the world but are less frequently seen in emerging markets where inflationary risks are higher. However, Guimarães said banks can easily hedge against inflation. "The bank that lends, will be making, via treasury, its hedge for inflation variations," he reportedly said.

Earlier this year, Caixa began offering inflation-linked mortgages with interest rates that adjusted based on Brazil's IPCA consumer price index. It also recently dropped its rates on some residential mortgages, as Brazil's central bank has moved its monetary policy rate to historic lows.

The CEO also addressed a potential decrease in the remuneration Caixa receives for managing the FGTS worker's severance fund, noting that the issue is being discussed with the government.