The real estate market needs a number of factors to be able to offer real estate at an affordable price to people, such as access to capital. One of the ways to obtain this resource is through financing. Have you ever stopped to think about the relationship between interest rates and the real estate market?
It is not an exaggeration to say that the real estate segment is one of the most sensitive to changes in interest rates. Given this, how can the consumer understand these rates and, thus, take advantage of the best time to buy a house, land or apartment?
To help you understand this subject, in a simple and didactic way, we have prepared this article. If you are not an expert in financial matters, don’t worry. Our goal is to explain the main points on this topic.
What is interest rate?
Money is not an infinite resource. If it were, it would have no purchase value. Therefore, those who have money use it to purchase consumer goods or invest. The objective is to bring financial returns to the investor – which includes banks.
In a nutshell, we can define the interest rate as the percentage of return that the person who lent capital will have on that amount. In this way, whoever takes a loan has an idea of how much they will have to pay to the one who financed it after a certain time.
However, markets cannot charge interest rates that deviate from the logic practiced by their competitors, as this would have an impact on the entire economy of the country. Imagine that banks started to lend money at zero interest? The increase in currency in the economy would raise the price of products and services, raising inflation.
On the other hand, very high interest rates, those that make it impossible for the customer to make payments, are also illegal. To avoid abusive rates, the Government, through the Central Bank, establishes rules for charging interest on loans.
That is why the so-called loan sharking is prohibited, because in addition to being used to launder money, this criminal modality carries exorbitant interest. So far, we have given a general context about the interest rate. Now, it’s time to narrow down the topic, talking about the most important rate for Brazilians: the Selic.
Have you ever stopped to think about what would happen if all the customers of a bank decided to withdraw their money at once? This would be chaos, as the institutions simply would not have the capital to continue operating.
In order to prevent this from happening, the Central Bank obliges banks to compulsorily keep an amount in their cash. Even so, with so many transactions taking place, money is sometimes lacking.
In this case, they lend capital to each other for a period of one day. This loan, as in any other modality, bears interest. The amount of such interest is the Selic rate.
It turns out that it serves as a reference for all other interest rates on the market. If it goes up, access to credit becomes more expensive. If it falls, credit becomes cheaper – and that is the main relationship between the interest rate and the real estate market.
What is the influence of the drop in interest rates in the real estate market?
The Selic is not imposed by the Government. The Monetary Policy Committee (Copom) establishes a target for this rate. After that, he sells government bonds with the aim of getting the rate to be achieved. That’s because banks buy these bonds as collateral for those loans that they make with each other.
By now, you may have noticed that the fall in the Selic rate makes real estate financing cheaper, right?
Interest and the pandemic
The Covid-19 pandemic had a strong impact on the world economy. With the lack of money circulating, either because business was disrupted or because many people lost their jobs, there was a need for loans.
That is why interest rates have plummeted all over the world. The idea is to make access to credit as easy as possible – and this represents an opportunity for anyone looking to buy real estate.
With cheaper real estate financing, people can purchase their properties at a much lower contractual cost. To give you an idea, Selic has already been at 16% in the past decade. In 2020, it increased to 2%.
Also evaluate the CET
A point of attention for those who are studying the interest rate and the real estate market is to understand that the contract that has the lowest interest rate does not always offer the best deal. A financing contract also comprises fees, insurance and other charges.
We call them Total Effective Cost (CET). Higher interest financing may be cheaper if you have a lower CET.
Another point of attention is the fact that interest is levied on the outstanding balance of the financing. If you make a good entry in the purchase, using your FGTS balance, for example, the financing tends to become cheaper.
In practice, two people who buy real estate at the same price may pay different amounts of financing, depending on the amount financed and how they repay the business.
How to get a mortgage?
The first step in getting financing is to understand what type of property you want, how much you can pay and how much you are going to finance. After these calculations, the buyer needs to research among financial institutions and make credit simulations.
So, avoid closing with the first company, even if it is a bank with which you already have an old relationship. To take advantage of the drop in interest rates and the housing market with lower prices, due to low demand, you need to research!
That’s why we invite you to chat with our team. CrediPronto has already signed more than 40 thousand real estate financing contracts, freeing up more than R $ 13 billion. We can help you buy the property of your dreams!