Curiosity and defaults rise and attain the best stage in 5 years, signifies Central Financial institution

The average interest rate for free credit is the highest since August 2017 and rose to 44.1% per annum in November, up 1.4 percentage points from the previous month

O central bank (BC) reported this Tuesday that interest rates and defaults rose in Brazil in November. According to the BC, the average interest rate for free credit rose to 44.1% per annum in November and it is the highest interest rate since August 2017, when the rate was 45.6%.

According to the BC, this November level is 1.4 percentage points (pp) more than in October and 10.4 pp compared to the November 2021 value, when the rate was 33.7% per year .

The default rate is at 4.3%, the highest level since June 2018, when it was 4.4%. The indicator grew 0.1 pp in relation to October this year, when it was 4.2%.

The increase in the cost of interest accompanies the increase in the basic rate, the Selic. In order to control inflation, the Central Bank began, as of March 2021, a movement to raise the Selic, which rose to 2.75% per annum, and is currently set at 13.75% per annum.

Higher cost for families

The cost of credit has become more expensive for families and is now at 59% per annum. 12 months ago, this rate was 44.4%, which represents an increase of 14.6 pp in this period. This is the highest interest cost for families since August 2017, when the average interest rate on free resources reached 62.31% per year.

The most expensive interest rate on the market, the credit card revolving rate, eased the month of November and dropped 15.4 pp in relation to October. Even so, it is at 392.6% a year, a very high level.

“At this level of interest rates, which are quite high, you don’t really see a relationship with something more macroeconomic, but perhaps variations in the portfolio, participation of higher cost operations in October. They are oscillations on a trajectory that is bullish. There was an increase throughout the year, which was suspended in that month, but the levels remain very high”, observes Renato Baldini, deputy head of the Central Bank’s statistics department.

For companies, the average interest rate stood at 23.4% per annum in November, maintaining stability in relation to the previous month, but representing an advance of 3.3 pp in relation to the last 12 months.

default

Despite the fact that the cost of credit for companies remains in a more stable framework, they are having more difficulty paying for it on time. The default rate among legal entities reached 2.2% in November. This is the highest indicator since May 2020, still during the pandemic, when default reached 2.4%.

In the case of families, there has been stability in the last two months: the rate of accounts over 90 days overdue is 5.9%.

Source: O Globo Agency