Interest

After using the credit line cheaper, Brazil enters the special

25/08/2010

Vania Cristino 
    

Rita Granjeiro commits to supply more than 50% of the minimum wage he receives each month.
She does not care about high interest rates

With access to cheaper lines of credit nearly exhausted, the Brazilians are hanging in short-term debts, such as overdraft. Given this move, banks have not made for less: increased interest rates to take advantage of consumers' need to close the household budget. Said today the central bank, the average cost of overdraft reached in July, the highest level of the last 12 months, digging 167.3% a year. Since May, this type of financing was seven percentage points more expensive.

Who is also needing to borrow staff has been forced to bear higher interest rates. Although the increase was less heavy, the average rate rose from June to July, from 42.0% to 42.2% annually. But it is important to make a reservation: interest on personal loans rose less because in them is built into the cost of payroll loans, one of the lowest in the market. The rate of discount financing leaf decreased by 0.3 point in July, from 27.1% to 26.8% per annum. The problem is that potential borrowers have reached the maximum impairment of income, 30% allowed by law for this type of debt. That is, of struggle, what remains is to run more expensive debts.

Banks do not make rogated. By data released by the BC, it became clear that the cost of borrowing - which the institutions pay the customer's investment - not increased. What has increased the spread, the difference between the rate paid to savers and what is charged from borrowers. Most of the spread becomes profit. On average, the interest to individuals hit in 40.5% a year, of which 28.9 points are spread (in June were 28.6 points).

Businesses suffer
Families are not, however, the only punished by rising interest rates. Also, firms are paying more for financing. Discounting of duplicate, the rate rose 2.7 points from June to July, reaching 41.1% per annum. In the guaranteed account, the overdraft of the productive sector, the increase was 6.8, with interest from 85% to 91.8% per annum. It is the higher rate for this type of loan since April 1999.

For Altamir Lopes, head of Economic Department of the BC (Depec), the sudden enhancement of the credit portfolio is due to the remainder of the operations of banks with free resources. "There's been a marked migration of companies targeted for the free credit, which has much lower rates," he said. He added that companies were in the free credit can not do such migration, in which case the risk is higher institutions, which results in higher interest rates. The BC does not show, however, the rates of directed credit.

Despite the yearning for loans and financing, consumers and businesses are aware of the high interest and, therefore, have been taking your foot off the accelerator. The total volume of loans closed in July for R$ 1.54 trillion - an increase of 1.2% in the month and 18.4% in 12 months. The Central Bank estimates for the year increased by 20%, with the credit / GDP (Gross Domestic Product), currently at 45.9% to 48%.

In large part, this performance will be supported by transfers from the Banco Nacional de Desenvolvimento Economico e Social (BNDES). In July, the releases of the institution increased by 4.7%, and 12 months, 45.4%. At the same pace, the BC only computes the housing finance, an increase of 4% in the month and 51.1% in 12 months. The remaining funds grow at rates very low or even fall. This applies to the guaranteed account. In June, the awards accumulated (new loans) totaled R$ 27.3 billion and in July, R$ 22.8 billion - less than 16.5%.

Mismatch
It depends on the professional person Raimundo Nonato de Carvalho, 59, the volume of credit will drop. It only makes cash purchases. "I'm an annoying customer, I like to haggle. Pay benefits is not me, "he said. Already the gari Antonio Dantas, 51, is mired in debt. He said more than half of R$ 510 per month earning is committed debts. "I always buy in installments because I have no money to pay cash." The last thing he took home was a mobile, land parcels were added to the property tax payment books and appliances. In order to get the budget account with the help of his wife and daughters. "Alone, I can not handle."

Employee of a bakery, Rita Granjeiro, 20, also cuts a double to secure the services they consume over 50% of the minimum wage he receives monthly. "Pay my glasses, my cell phone and shopping for my son," he said. Despite the struggle, said she does not shy away from buying the products they like, regardless of interest rates.

CONFIDENCE HIGH
"The record in job creation during the first half, added to the context of economic heating, helped the Consumer Confidence Index (CCI) to reach 120.8 points in August, representing an increase of 0.7% compared with last month. The result is the best since September 2005 start of the series prepared by the Getulio Vargas Foundation (FGV). The positive numbers were pulled by the momentum for purchases of durable goods: the share of consumers who plan to buy within the next six months rose from 14% in July to 16.6% this month. According to the coordinator of the survey of consumer expectations of FGV, Viviane Seda Bittencourt, reliability record is a reflection of the high rate of jobs with signed observed in the first half. "With more jobs filled, the effects of the increase in income began to be perceived," he said.


Source: Correio Braziliense

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