Brazil household debt burden hits fresh record despite government relief efforts
SPY•Brazilian household debt reached a record 50.1% of income in August, while debt-service commitments hit an all-time high of 29.0%, central bank data showed. Delinquency in the free-credit segment remained at a record 6.6% in September.
1. Household debt rises
Household debt as a share of income over the previous 12 months rose to a record 50.1% in August, and income committed to debt servicing reached an all-time high of 29.0%. Excluding mortgages, household indebtedness rose to 31.0%, while debt-service commitments climbed to a record 26.7%.
2. Credit and policy
Delinquency in the free-credit segment for households and companies remained at a record 6.6% in September, unchanged from August and up 1 percentage point so far this year. Outstanding loans rose 0.4% month over month to 7.4 trillion reais, while annual credit growth slowed to 8.6%. Lula has pledged to auction consumer debt bought from banks at a discount, and the central bank said it was preparing measures to curb predatory lending.
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