Brazil’s mortgage market is tiny. Mortgages represent just 2% of gross domestic product (GDP) compared with 16% in Chile and 65% in the US. Banco Itaú, one of the three major private banks in the country, which has 100bn reais ($52bn) in outstanding loans, has a piffling 3bn reais outstanding mortgage lending. Still, the market may be microscopic today, but bankers like to think that just means there is more scope for growth. Their successes in profiting from consumer lending has them fired up about the potential for mortgages.
“In the past, we were willing to provide lending for real estate only to the letter of the law because there was an opportunity cost from cutting lending in other areas. Now, we view mortgages as being as attractive as other lending,” says Demósthenes Madureira de Pinho Neto, head of wholesale business at Unibanco, another of the top three private institutions.
