BRASILIA, Sept 30 Brazilians will be allowed to
apply money held in their government-run pension funds towards
the purchase of more expensive homes, Brazil's top economic
policy-making body announced on Monday, which could boost demand
in the country's recovering housing sector.
Brazil's National Monetary Council said on Monday that
formally registered workers in the states of Rio de Janeiro, Sao
Paulo, Minas Gerais and the Federal District could use money
they have accumulated in their so-called FGTS funds towards the
purchase of homes valued at up to 750,000 reais ($337,838), up
from a previous limit of 500,000 reais.
Those residing in other states would see the limit raised to
650,000 reais, the council said.
Under the program, employers deposit money into the fund
each month, which can only be withdrawn early for certain
purposes, one being the purchase of a new home.
Previously, the limit of 500,000 reais meant that many upper
middle-class Brazilians, many of who tend to purchase homes
costing above that limit, were unable to apply the funds towards
The change, which Brazil's homebuilding industry has called
for repeatedly in recent years, would allow more Brazilians to
take advantage of their FGTS funds, which offer very low
"It's positive for the sector as a whole and it was
expected," said Eduardo Silveira, an analyst with Espirito Santo
Investment Bank in Sao Paulo. "It will help companies with
demand for real estate because within the FGTS range, the cost
of funding is a bit lower."
Homebuilders in Brazil have struggled to remain profitable
in recent years after poorly managed expansion plans led to
project delays, higher sales cancellations and hefty cost
An index of homebuilder shares traded on Brazil's benchmark
Bovespa index fell 1.02 percent on Monday. The
announcement was made after the market close.
Julio Carneiro, the deputy chief of the central bank's
financial norms division, said authorities do not expect the
measures to spark a boom in the real estate sector. However, he
said the measures will likely help construction companies that
have been demanding an increase in the ceiling for the last two
He added that authorities decided to lift the limits because
of a steep increase in Brazilian property values in recent