When Brazilian bank customers need to access savings from their time deposit accounts, they just go to their nearest branch and convert the funds into a current account. Given the country’s volatile history of inflation and financial crises, no mainstream bank could ever entertain refusing such a request. But now that Brazil has macroeconomic stability, such practices are holding back the development of the country’s mortgage market.
With mortgages accounting for only 4% to 5% of gross domestic product (GDP) and making up only a small percentage of banks’ lending portfolios, the potential for growth is huge. This cannot be realised, however, until long-term funding is available and the mentality of always requiring, and obtaining, instant access to cash disappears.
