SELIC Rate
The Selic rate is Brazil’s benchmark monetary policy interest rate. When the Central Bank raises the Selic rate to control inflation, the cost of real estate credit rises — loan installments get more expensive, demand falls, and property price growth…
Explanation
The Selic rate is Brazil’s benchmark monetary policy interest rate. When the Central Bank raises the Selic rate to control inflation, the cost of real estate credit rises — loan installments get more expensive, demand falls, and property price growth slows. In the reverse cycle, with the Selic rate falling, cheap credit fuels demand and, as a rule, prices rise.
For investors, the Selic rate sets the property’s “opportunity cost”: with the rate at 13%, fixed income is easier to justify; with the Selic rate at 8%, quality properties yielding 6%–7% become more competitive once appreciation is added in.