Brazil’s central bank said on Thursday that consumer demand for credit and credit availability will improve in coming months, but businesses’ access to new loans could be restricted.
The central bank said that overall credit supply is likely to grow at a pace of 14 percent this year, a decrease from 16 percent last year and 19 percent in 2011. While lending has seen a significant increase in the past 10 years, credit growth slowed down last year amid non-performing loans and an increasing amount of consumer debt, Fox Business reports.
In December, the central bank surveyed financial institutions about the credit market. Many expected the supply of consumer loans and mortgages to expand in the next three months after remaining flat in the previous quarter.
An index used to measure projected demand for consumer loans rose from 0.12 in the previous quarter to 0.47 over the next three months.
“Families take more credit this time of year to pay for school supplies, holiday expenses and taxes,” Economic Policy Director Carlos Hamilton said, according to Fox Business.
The rise in consumer credit demand has also been attributed to a reduction in interest rates that boosted the debt coverage ratio, though Hamilton said that the amount of family income used to service debt will not likely decrease any further, because overall household indebtedness has continued to increase. Annual interest rates for consumer loans dropped to 34.6 percent in December from more than 45 percent for most of 2011.
While consumer loan approval saw lower numbers in the last quarter, it is projected to have a better outlook in the first three months of 2013.
“Expectations bottomed out in the first half of last year and things have been improving since the second half,” Hamilton said, Fox Business reports.
Credit supply to large and small businesses, however, is expected to continue its decline in the first quarter of the year, though companies have expressed demand for credit.