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Brazilian debt-to-income ratio hit 44.0% in May, highest in 3 years

Indebtedness among Brazilians rose to its highest level in three years, as households' debt-to-income ratio hit 44.0% in May, according to data from Banco Central do Brasil.

The latest figure was higher than the 41.9% recorded in the year-ago period and just slightly under the 44.2% tallied in April 2016, a signal that Brazilians are beginning to borrow again after a protracted post-recession period that followed the economic crisis between 2014 and 2016.

Excluding mortgage loans, the debt-to-income ratio reached 25.4% in May, up from 23.4% a year ago.

The share of income committed to pay debt was at 20.3%, almost flat from 20.2% a year earlier. Meanwhile, delinquencies among individuals have been ranging between 4.7% and 4.8% from January to June, after lingering above 5.0% for most of 2018.

Although the figures mean that Brazilians are able to repay their debts despite growing credit, their ability to do so could lessen if their income remains stagnant, Valor Econômico reported.

"One-fifth of households already use more than 50% of their income to pay debts," economist Marianne Henson told the publication. "We need more jobs, more income, more activity to support this growth of credit, otherwise we may see a rise in defaults," she added.