Referential rate (TR) is a rate that emerged in the 1990s to serve as a reference for various financing and investments. It impacts the economic sector, savings accounts, the Guarantee Fund for Time of Service (FGTS), capitalization bonds, among others. For this reason, it is important to know what it is for and how your calculation works.
In this post, we will explain what the referral rate is and show how it influences financing. We will also talk about its importance and demonstrate how it is calculated. Here, you will understand how it impacts real estate operations and investments and how a consultation can be useful for decision-making.
Would you like to know more about the impact of the referral rate on the real estate market? So follow along with reading this article and understand!
Find out what it is and what are the main impacts of the benchmark rate
The TR was designed to be a reference rate that would serve as a parameter for interest charged within Brazilian territory at a time when inflation could not be controlled. Today, it is an indicator used in the monetary restatement of credit operations and financial investments. Therefore, it corrects values over time.
The indexation of TR in real estate financing was mandatory until 2018. The rate was used to correct the outstanding balance of financial commitments, but it remained null on several occasions or had low levels. In view of this, the Central Bank decided that it would no longer necessarily be applied to contracts.
Check the importance of the referral fee
The TR is important because it focuses on savings that are also affected by the Selic Rate. The passbook income rules were changed in 2012 due to the basic interest rate. Thus, savings income is 0.5% per month plus TR if Selic is above 8.5%.
Furthermore, the TR influences the lives of citizens who work as employees, as it interferes with FGTS. These amounts can be withdrawn when the accounts remain inactive for a predefined period and it is an option to make new investments. The fund has an annual yield of 3% plus the Reference Rate that is applied to correct the amounts.
The Basic Financial Rate (TBF) and the TR indicated the average interest rates offered by the CDBs and Bank Deposit Receipts (RDBs) issued by the institutions until 2018. But the calculation methodology was modified, being that today the TBF is calculated based on the National Treasury Bills (LTNs) or the National Treasury bills.
In operations, an average of the interest rates that the secondary market practices in negotiations with LTNs is considered. The secondary market is composed of investors who negotiate the securities with each other by buying and selling them without having contact with the National Treasury, which is the issuer. Transactions are recorded in the Special Settlement and Custody System.
The change was necessary for the calculation to be adapted to the new reality of the market, which is always evolving. RDBs and CDBs have ceased to be interesting recently and are falling out of favor because there are more interesting applications today. The change to LTNs maintained the relevance of TR and TBF.
See how the referral rate is calculated
When closing a contract, it is necessary to understand how operators perform the calculation of the TR, its operation and the monthly results. The Central Bank discloses the amount of the fee, which is obtained through the daily collection of information on the rates applied by banks in Bank Deposit Certificates.
After this research, the Basic Financial Rate is obtained, which represents an average of interest, which is applied in the following equation: “TR = 100 x [((1 + TBF) / R) – 1]”. The letter R stands for Reducer, whose value is obtained by means of the formula: “R = (a + b) x TBF” and the variable “a” is equal to 1.005.
This variable was defined when the TR was created so that it would not present negative values. The term “b”, on the other hand, depends on the TBF and its disclosure is made every month on the Central Bank’s website. After obtaining all this data, just apply the formula to access the reference rate.
As you can see, it is not necessary to have mastery of formulas. It is enough to analyze them to realize that the minimum value of the TR will be 0.00%, which is why the money can never suffer losses or have negative earnings. In the Citizen Calculator, made available by the Central Bank, it is possible to check the updated percentage of the rate.
The monthly TR is applied to the income of the money or the monetary correction, whenever a value remains invested during the whole month. The daily reference rate is used whenever the investment is redeemed before completing 30 days, as it is a slice originated from the monthly amount. The sum of the daily TRs results in the monthly TR.
Did you understand what a Referential Rate is and how it impacts your finances? Know that it is important to know how the calculation is done to make sure it is worth using TR. A mortgage consultant can help you decide which option is most beneficial for your investments and loan contracts.
Do you want to know more about it? So get in touch with us right now and get all your questions answered!