Overview

• Lula will unveil the measure on Oct. 10 in São Paulo, and the government ordered the pilot to start immediately once the CMN authorizes it, with the Central Bank drafting the necessary resolution and calling an extraordinary meeting this week.
• Under the Central Bank’s design, every real granted in a housing loan unlocks an equal amount of poupança resources for banks to use freely for five years, and renewing that access requires new lending; the model was developed with the Cities and Finance ministries and Caixa.
• In the trial, participating banks can tap 5 percentage points of the poupança compulsory deposit, cutting their requirement from 20% to 15%, and 80% of the freed money must fund SFH mortgages capped at 12% plus TR for homes up to R$1.5 million, with the remainder allowed in the SFI.
• Officials expect at least R$20 billion to be released this year, with press estimates suggesting scenarios up to R$37.5 billion depending on bank uptake; Caixa is expected to participate while private banks’ adherence remains uncertain.
• A companion home-repair program was finalized with three income tiers, offering monthly rates of 1.17% and 1.95% for lower bands, and the credit line is expected to be available at Caixa by late October.