Transcript The Structure of Housing Finance and the Subsidies Policy in Brazil

The structure of
housing finance and the
subsidies policy in Brazil
PRELIMINARY VERSION
Fernando Garcia
Secretaria Nacional de Habitação
Ministério das Cidades
São Paulo, September 24th, 2014
RESOURCES FOR HOUSING SUBSIDIES
The present structure of housing subsidies in Brazil involves
resources from four sources:
(i)
the Union budget (OGU);
(ii) the Residential Leasing Fund (FAR);
(iii) Workers Compensation Fund (FGTS) that allocates non-costly
funds to housing financing; and
(iv) Land donated by states and municipalities.
These types of subsidies are used individually or in a
combined manner in different federal government housing
programs.
PROGRAMS OF HOUSING SUBSIDIES
In the last ten years, the structure of housing subsidies in
Brazil had involved programs that transfer grants for
financing to:
(i)
states, municipalities and states, the Federal District and public
companies (Pro-housing and Residential Lease Program);
(ii) people grouped in unions, cooperatives, associations, COHAB or
private entities focused on the production of housing (Associative
Letter of Credit and Solidarity Credit Program); and
(iii) Families (Individual Letter of Credit and PMCMV).
These types of subsidies were used for both acquisition or
leasing of social housing. PMCMV is responsible for more
than 95% of all grants in the last 5 years.
Number of housing units financed
with subsidies from some federal program
Source: Caixa Econômica Federal.
Credit and subsidies from the MCMV Program,
per family earning bracket, for 2009 to 2013, in R$
Earnings bracket of up
to R$ 1,600.00
Earnings bracket
between R$ 1,600.01
and R$ 3,275.00
Earnings bracket
between R$ 3,275,01
and R$ 5,000.00
Total
1,527,379
1,294,919
417,361
3,239,659
Credit* amount
10,997,128,800.00
66,675,298,088.20
31,371,647,964.90
109,044,074,853.10
Total subsidy
62,404,222,509.42
24,779,633,728.17
2,730,073,132.55
89,913,929,370.14
3,296,202,719.12
5,710,642,775.18
648,874,459.17
9,655,719,953.47
-
19,068,990,952.99
2,081,198,673.39
21,150,189,626.37
59,108,019,790.30
-
-
59,108,019,790.30
-
10,550,493,217.00
6,353,986,040.00
16,904,479,257.00
73,401,351,309.42
102,005,425,033.37
40,455,707,137.45
215,862,483,480.24
Income bracket
Units
Balance subsidy*
Union Budget subsidy
FAR subsidy
Previous savings
Amount of the Investment
Source: Caixa Econômica Federal. (*) for beneficiaries in the earnings bracket of up to R$ 1,600.00, the amount of credit
corresponds to the 120 payments of 5% of average earnings.
Source : Ministério das Cidades and Caixa Econômica Federal.
(%) subsidies / house prices,
From 2009 to June, 2013
.
Source
: Ministério das Cidades and Caixa Econômica Federal.
Distribution of the subsidies
by income bracket (%)
Fraction of potential families entitled to the MCMV Program,
per Brackets and Regions, September 2012
Income bracket
Earnings bracket
Earnings bracket
Earnings bracket of
between R$ 1,600.01 between R$ 3,275,01
up to R$ 1,600.00
and R$ 3,275.00
and R$ 5,000.00
Earnings higher
than R$ 5,000.00
North
62.0
86.9
7.1
5.9
Northeast
71.4
90.3
4.8
4.9
Southeast
42.1
74.9
12.4
12.7
South
39.1
74.6
13.2
12.2
Center-West
43.9
75.2
11.2
13.6
Brazil
51.1
79.9
10.0
10.1
Source: PNAD 2012, IBGE.
Fraction of the demand attended by MCMV Program,
24th biggest cities, 2010-2013
Source: CEF and Ministério das Cidades.
Frequency of contracts by family monthly earnings, PMCMV,
Earnings bracket of up to R$ 1,600.00
Demand
PMCMV
Source : IBGE, Ministério das Cidades and Caixa Econômica Federal.
Frequency of contracts by family monthly earnings, PMCMV,
Earnings bracket between R$ 1,600.01 and R$ 3,275.00
Demand
PMCMV
Source : IBGE, Ministério das Cidades and Caixa Econômica Federal.
Frequency of contracts by family monthly earnings, PMCMV,
Earnings bracket up to R$ 3,275.00
Demand
PMCMV
Source : IBGE, Ministério das Cidades and Caixa Econômica Federal.
Income transfers for PMCMV beneficiaries, in R$
The average transfers
for beneficiaries with
earnings of up to R$
1,600.00 are 1.9 times
the average transfers
for beneficiaries with
earnings between R$
1,600.01 and R$
3,275.00, and 10 times
the transfers made for
families with earnings
higher than 3,275.00
Source: IBGE, Ministério das Cidades and Caixa Econômica Federal.
Income transfers for PMCMV beneficiaries, in months of average earnings
In terms of months of
earnings, the average
transfers for
beneficiaries with
earnings of up to R$
1,600.00 are 6 times
the average transfers
for beneficiaries with
earnings between R$
1,600.01 and R$
3,275.00, and 32 times
the transfers made for
families with earnings
higher than 3,275.00
Source : IBGE, Ministério das Cidades and Caixa Econômica Federal.