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Caixa seeks earlier implementation of Brazil's real estate funding changes

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Caixa seeks earlier implementation of Brazil's real estate funding changes

Caixa Econômica Federal CEO Nelson Antonio de Souza has called on Brazil's National Monetary Council to introduce changes to real estate funding regulations in September, instead of in January 2019, Reuters reported.

Under the changes, the maximum property value for low-cost pró-cotista mortgages, which use resources from the FGTS workers' severance fund, will be raised to 1.5 million reais from the current ceiling of 950,000 reais. The pró-cotista real estate credit line is the cheapest credit line in the Latin American country's mortgage market.

That would help Caixa, which is Brazil's largest real estate lender, to boost mortgage lending amid tougher competition from private banks. The bank was forced to suspend the pró-cotista line in 2017 due to lack of resources, but has since reopened it under the aforementioned ceiling.

According to Souza, private lenders have benefited from recent Banco Central do Brasil's measures which increased resources in sector. Meanwhile, Caixa has underperformed in loan disbursements, resulting in worsening real estate conditions for the middle class, the CEO of the state-owned bank said.

On Aug. 1, the National Monetary Council approved changes to real estate lending rules in a move that should inject around 80 billion reais into the credit system. Under the new rules, which take effect Jan. 1, 2019, and will be imposed gradually over six years, Brazilian banks will have more credit channels for mortgage lending.

The move also includes a string of other measures giving incentives to disburse more loans for housing, such as raising the ceiling for loans financed by FGTS.

As of Aug. 10, US$1 was equivalent to 3.85 Brazilian reais.