THE OFFER OF BRAZILIAN HOUSING CREDIT DURING THE PERIOD 2003 - 2010

Abstract

This work seeks to analyze the release of housing credit, with particular attention to financing granted by the Central Bank of Brazil and through Certificates of Real Estate Receivables (CRIs). According to economic theory vis-à-vis the multiplier effect these certificates can increase the volume of trade in a given country without changing the amount of currency in circulation, ie, via securities speculation based on mortgages, economic agents trade quotas of a collateral backed property in smaller, or sometimes not so small, markets. According to the Central Bank, this practice grew at a greater magnitude in Brazil in the years following 2004. For this reason, recognizing both the fact that a single president held power during this period, and the availability of data concerning the topic, the years 2003-10 werw selected, gathering data from the websites of the Central Bank of Brazil (BCB), the CIBRASEC Company, the Brazilian Securities Company and the Brazilian Securities Commission (CVM). Theoretical contributions are provided by a review of the main features of credit creation and the development of the Housing Financing System. The results and discussion section analyzes the development of the Housing Financing System, focusing on the evolution of credit supply data over the period. Following this, focus turns to the evolution of household and commercial debt levels. Taking into account increases in the supply of mortgage loans tied to reduced levels of indebtedness, in conjunction with a reduced proportion of mortgages/Brazilian GDP as compared to other countries, the study concludes that the growth of housing credit in Brazil in the period 2003-2010 was sustainable, suggesting that there is room for policy stimulus without the risk of generating a bubble sector.