The default rates of Brazilian consumers rose 21.5% in 2011 compared to the previous year, the largest year-on-year increase seen since 2002 (which was 24.7% compared to 2001), said Serasa Experian (via Exame).
“The rise in inflation, which reduced workers’ earnings, and high interest rates affected the capacity of consumers to pay amid a rise in indebtedness in 2011,” said the entity.
Serasa added that this (medium and long term) debt has been in place since 2010, when credit conditions and the consumer’s budget were more favorable than in 2011.
Financial Times had a “change of heart” and now says there is no credit bubble in Brazil
They could be right, after all… who knows. According to FT’s Joe Leahy:
The fears of some hedge funds that Brazil was heading for a US-style credit bubble have failed to materialize. Indeed, as many economists have argued on beyondbrics, the direct analogy between Brazil and the US housing credit bubble is a flawed one.
The consumer credit market in Brazil does not follow obvious international norms. The local mortgage market is tiny. And a large number of consumer borrowers in Brazil take out loans with fixed interest rates rather than floating rates, insulating them from fluctuations in inflation and interest rates. And while the rise in defaults was big, the absolute figures for non-performing loans, although not released by Serasa, are within long-term trends.