July has a document of 78% of indebted households and 29% in default, says CNC

Total defaulters increased by 0.5 percentage point from June to July.

The country started the second semester with a new record of indebted and defaulting Brazilians, according to data from National Confederation of Trade in Goods, Services and Tourism (CNC). In July, 29% of families had some type of account or debt in arrears, the highest level of default since 2010, when the historical series of PConsumer Indebtedness and Default Survey (Peic).

According to CNCO increase in default indicates that government measures to stimulate consumption, such as extra withdrawals from the FGTS and the anticipation of the 13th salary to the beneficiaries of the INSShad only a momentary effect on the payment of overdue bills or debts, concentrated in the second quarter of this year.

The total of defaulters increased by 0.5 percentage point from June to July. Compared to July 2021, there was an increase of 3.4 percentage points in the proportion of households in default situation.

The percentage of households in debt rose to a peak of 78% in July, up 0.7 percentage points from June. In relation to July last year, the proportion of indebted households grew by 6.6 percentage points. The research considers as debts the accounts due in post-dated checks, credit card, overdraftstore booklet, consigned credit, personal loancar loan and house loan.” The percentage of income commitment remains at the same value, at 30.4%, since April, but 22% of Brazilians have more than half of their income committed to debt”, pointed out the CNCin note.

Arrears and the number of defaulters

In July, 10.7% of families said they were unable to pay their debts already overduethat is, they will remain defaulters, up 0.1 percentage point from June. According to the CNC, most of those who will remain without paying bills or debts already overdue from previous months are among consumers who did not complete high school (13%), who were also the ones who most needed to delay payments in July itself (33.3% ).” The expense classes of families that earn less are precisely the ones that have had the biggest recent price increases, so they end up spending a larger share of the budget to face the increase in inflation. That is, families with lower incomes were more affected and increased their indebtedness, despite high interest rates, to sustain their level of consumption”, explained the economist. Izis Ferreiraresponsible for researching the CNCin an official note.

The proportion of indebted households among families earning more than ten minimum wages per month rose to 75.0% in July, while the total number of households in debt among those earning up to ten minimum wages rose to 78.8%.

Credit card and personal loans

Among the types of debt, there was a reduction for the third consecutive month in accounts payable in credit card. Of the total indebtedness, 85.4% had debts in the credit card in July compared to a share of 88.8% in April this year.

“Families have been looking for cheaper credit alternatives because of the high interest. Therefore, store booklet and personal credit were the modalities that advanced in the indebtednessat the beginning of the semester, representing 18.8% and 9.2% of the total of families with debt, respectively”, added Izis Ferreira.

The survey also showed a drop in financing in automobiles and the house itself. In July 2021, 12.6% of families paid car payments and 9.7%, of houses. In July of this year, only 10.6% of families pay car financingwhile the share committed to mortgage payments dropped to 7.6%.

“The reason for less use of long-term credit is also the growth in interest rates, which increased by an average of 5.8 percentage points in one year, for cars, and 2.8 pp, in the case of the acquisition of real estate by individuals” , justified the CNC.

(Status Content)