Brazil's Central Bank has confirmed: the interest rate cutting cycle begins in March 2026. After keeping the Selic rate at 15% per year for five consecutive meetings—the highest level since July 2006—the Copom (Monetary Policy Committee) signaled in the minutes of its last meeting that it will begin easing monetary policy. For those following the Brazilian real estate market, this news represents much more than a technical adjustment in monetary policy. It represents the beginning of a new phase.

According to the Central Bank, the expectation is that the rate will fall to 14.5% as early as March, with Focus bulletin projections pointing to 12.25% by year-end. For the real estate market, this drop is not just good news—it's a game-changer that could redefine access to homeownership for hundreds of thousands of Brazilian families.

The interest rate roller coaster: from 2% to 15% in five years

To understand what this turnaround means, it's worth looking back. The Selic experienced one of the most dramatic swings in its recent history between 2020 and 2026. At the height of the pandemic, in February 2021, the benchmark rate reached a historic low of 2% per year—an unthinkable level for a country accustomed to double-digit interest rates. At that moment, mortgage credit became extraordinarily accessible, and the market responded with a boom in launches and sales.

But the party didn't last long. The combination of global inflationary pressures, real depreciation, and increased public spending forced the Central Bank to initiate one of the most aggressive monetary tightening cycles in the world. Between 2022 and 2023, the Selic jumped from 2% to 13.75%. There was brief relief in parts of 2024, when the rate dropped to 10.5%, but inflationary pressure returned and interest rates resumed their upward trajectory. In January 2026, we reached the current level of 15%.

This volatility has direct consequences for the real estate market. Unlike other economic sectors that can quickly adjust to changes in credit conditions, the construction industry works with medium and long-term horizons. A development launched today will take two to four years to be delivered. Developers who bet on projects during the low-interest window in 2021 had to deliver units in 2024 and 2025, when the credit landscape was completely different.

According to the Federal Council of Real Estate Brokers (Cofeci), interest rates for SBPE financing—the system that uses savings account resources for housing credit—closely follow the Selic, oscillating between 11% and 12% when the benchmark rate is at 14.75%. These are levels that, while not outside Brazilian historical norms, push a significant portion of the middle class away from financing access.

Resilience despite high rates: the market that didn't stop

Even with the Selic sky-high, the Brazilian real estate sector showed surprising strength in 2025. According to the Brazilian Chamber of the Construction Industry (CBIC), there were 433,000 units launched and 420,000 sold in the last 12 months. The 8.4% growth in launches between January and September demonstrates that demand for real estate remains heated—despite everything.

Real estate financing reached R$324 billion (approximately US$56 billion) last year, according to CBIC data, with a projected increase to R$375 billion (US$65 billion) in 2026—a jump of 15.7%. These are numbers that defy conventional logic that high interest rates paralyze the market.

The explanation for this resilience involves several factors. First, Brazil's housing deficit remains immense. Millions of families need housing, regardless of credit conditions. Second, the Minha Casa, Minha Vida program operates with subsidized rates that partially insulate its beneficiaries from Selic fluctuations. And third, high-income buyers—purchasers of properties above R$2 million (US$350,000)—have less dependence on traditional credit, moving the market with their own resources or different financing profiles.

"We have the capacity to grow 10% in 2026, despite high interest rates, because demand continues to grow," stated Renato Correia, president of CBIC, in an interview with A Gazeta. The statement reflects the sector's cautious optimism: there is pent-up demand, there is capital waiting for better conditions, and the Selic drop could be the missing trigger.

Credit mechanics: how each percentage point changes the game

The relationship between Selic and the real estate market is not simply one of direct cause and effect. The benchmark interest rate influences the cost of money throughout the economy, but the path to the housing finance installment goes through several stages. When the Selic rises, banks pay more to raise funds, which increases the cost of credit they offer. Additionally, savings account returns partially follow the Selic, which affects the availability of resources in the SBPE.

The most visible impact is on families' payment capacity. A family with monthly income of R$15,000 (US$2,600), which could finance a R$600,000 (US$104,000) property at 9% annual interest, may not be able to get the same financing approved when rates jump to 12%. The monthly payment rises, income commitment exceeds limits accepted by banks, and the dream of homeownership is postponed—or resized to a smaller, more distant property, less suited to the family's needs.

Each percentage point drop in the Selic has the potential to include about 160,000 new families in the financing market, according to a study by the Brazilian Association of Real Estate Developers (Abrainc), as reported by Forbes. The calculation considers the cascade effect: lower interest means lower payments, which means more families with bank-approved payment capacity.

If the Selic really falls from 15% to 12.25% by December—a reduction of 2.75 percentage points—we're talking about potentially 440,000 new families who will be able to access mortgage credit. These aren't abstract numbers. These are people who were waiting for the right moment to buy, couples who postponed plans, families who moved to smaller properties during the interest rate peak.

This is especially relevant for the mid-market segment. According to Abrainc, rising interest rates over the past five years excluded 800,000 families from access to credit for R$500,000 (US$87,000) properties. The Selic drop begins to reverse this scenario, bringing back consumers who had given up on buying.

What has already changed in 2026: measures anticipating the recovery

Beyond the expectation of Selic cuts, the federal government has already implemented measures that directly impact the launch market. These are structural changes that, combined with falling interest rates, can significantly amplify the positive effect on the sector.

The release of 5% of savings reserve requirements is perhaps the most impactful. Banks are required to keep a portion of savings deposits as reserves at the Central Bank—it's a prudential measure that ensures financial system soundness. By reducing this requirement, the government releases resources that can be directed to housing credit. According to Abrainc, this measure should inject an additional R$35 billion (US$6.1 billion) into housing credit via SBPE.

Added to this are other changes to the Housing Finance System. According to Forbes, the new SFH proposes reducing savings requirements and the possibility of increasing the financed percentage, releasing between R$30 billion and R$40 billion (US$5.2-7 billion) additional to the market. These are resources that, in practice, mean more families with financing access.

The Housing Finance System ceiling was also updated from R$1.5 million to R$2.25 million (US$260,000 to US$390,000)—the first adjustment in seven years. This change has important implications. Properties financed through SFH can use FGTS (severance fund) resources for down payments or amortization, in addition to having more favorable interest rates. With the expanded ceiling, upper-middle-class apartments that were previously outside the system can now be financed under better conditions.

The creation of Tier 4 of Minha Casa, Minha Vida addresses a long-standing sector demand. Families with income between R$8,000 and R$12,000 (US$1,400-2,100) were in a kind of limbo: they earned too much to fit traditional program tiers, but couldn't afford market-rate conventional credit. The new tier combines FGTS, longer terms, and competitive rates to serve this audience.

The MCMV program, incidentally, hit a record in 2025 with 625,000 contracted units, according to CBIC, and the expectation is to surpass this number in 2026. The FGTS budget allocated to housing finance already has a planned increase, going from R$127 billion to R$144 billion (US$22-25 billion)—a 13% growth that signals the government's commitment to housing policy.

Market segmentation: who wins, who waits

Not all real estate market segments are affected the same way by the Selic drop. Understanding this differentiation is fundamental for developers planning launches and for buyers evaluating when to enter the market.

Minha Casa, Minha Vida accounts for about 65% of real estate production in São Paulo city, the country's main market—a share that was close to 45% until 2023. The segment operates with greater liquidity and sales velocity, sustained by smaller tickets and more accessible credit conditions. Since rates are subsidized and resources come from FGTS, this audience is less sensitive to Selic variations.

For Ely Wertheim, executive president of Secovi-SP, the 2026 scenario is clearly more positive than recently presented, as he stated to Forbes. He projects that the Selic will end the year around 12%, creating more favorable conditions for housing credit.

The mid-range—buyers of properties between R$700,000 and R$1.5 million (US$122,000-260,000)—remains more pressured by financing costs. This is the audience that has suffered most in recent years and stands to gain most from falling interest rates. According to Abecip, SBPE financing—the main credit source for this segment—fell more than 20% in 2025. Recovery should be gradual but consistent.

High-income buyers—properties above R$2 million (US$350,000)—show less dependence on traditional credit. Buyers in this segment frequently use their own resources, sell other properties to buy, or access differentiated credit lines. The Selic impact exists but is less determinant.

In the view of Ygor Altero, head of the real estate sector at XP, as reported by Forbes, this difference in behavior should continue in 2026. Low-income remains more protected by government housing programs. The middle and high-income segments remain more exposed to the macroeconomic environment, which may translate into slightly lower sales velocity and possible deceleration—although nothing that compromises the general growth trajectory.

The scenario for developers: timing and strategy

For developers planning launches in 2026, the scenario presents clear opportunity windows—but also requires careful calculation. The second half tends to be more heated, with the Selic projected at 12-13% by December. Launches scheduled for this period can capture a more favorable credit scenario, with lower financing rates and a larger pool of eligible buyers.

Research by Brain Strategic Intelligence shows that 48% of the mid and high-end audience intends to buy property. What was missing was accessible credit. As interest rates fall and conditions improve, this pent-up demand begins to materialize into actual sales.

Renato Correia, CBIC president, highlights that the construction industry operates with medium and long-term horizons and that there is legal certainty for investment continuity, regardless of the electoral calendar. It's an important statement in a year when elections can generate noise in economic news.

Construction cost control and gradual improvement in credit accessibility create a favorable environment for maintaining sector companies' margins, according to XP analysis. Developers who managed to get through the high-interest period without compromising financial health are well-positioned to capture the growth taking shape.

For those operating in the mid-range, recovery of this segment represents the year's main opportunity. With R$35 billion (US$6.1 billion) in additional credit entering the market via reserve requirement release, plus R$30-40 billion (US$5.2-7 billion) from the new SFH, and the system ceiling expanded to R$2.25 million, there is room for real growth in products that were stagnant.

Challenges that remain: beyond interest rates

It would be naive to imagine that the Selic drop solves all sector problems. CBIC president Renato Correia points to structural bottlenecks that can limit growth even with more favorable credit conditions.

"Beyond interest rates, competition for labor continues to be quite demanding, and the big problem is that we're entering industrialization, but the registration process, city hall approval, this dynamic still doesn't keep up."

Bureaucracy in project approval remains a significant obstacle. In some Brazilian cities, obtaining all necessary licenses to launch a development can take years. These are processes involving multiple agencies, requirements that change midway, and an administrative culture that doesn't always keep pace with the market.

The shortage of qualified labor is another persistent challenge. During real estate boom periods, construction absorbs workers who then migrate to other sectors when the market slows. Rebuilding this workforce takes time. And construction industrialization—use of prefabricated components, more modern building systems—still faces cultural and regulatory resistance.

There's also the electoral calendar. Although CBIC expresses confidence in investment continuity, presidential election years typically bring market volatility. High-value purchase decisions, like acquiring property, can be postponed by families who prefer to wait for election results before assuming long-term financial commitments.

Finally, it's worth remembering that the Central Bank made clear it will maintain "adequate restriction" even while starting the cutting cycle. The Selic will fall, but won't plummet. The year-end expectation of 12.25% still represents restrictive rates by international standards. Credit will become more accessible, but won't return to the exceptional conditions of 2020 and 2021.

What to expect in the second half

The consensus among market players is that credit will return to playing a central role in 2026. The projected 2 to 3 percentage point reduction in interest rates, combined with increased real estate financing, tends to ease pressure especially on the middle class.

The expectation of falling interest rates is also reflected in the capital markets linked to the sector. According to Marcos Freitas, founding partner of AZ Quest Panorama, as reported by Forbes, this movement tends to mainly benefit brick-and-mortar real estate funds—those that invest directly in properties like shopping centers, warehouses, and offices.

The outlook is for continued vacancy reduction in logistics and corporate segments, plus a more heated rental market in the first half. The second half may be more moderate, influenced by the World Cup and elections, but the overall trajectory remains positive.

For buyers, the moment requires careful analysis. Waiting for interest rates to fall further may mean finding higher property prices—the law of supply and demand works in both directions. Those who can get financing approved today, even at higher rates, can refinance after rates drop, capturing the best of both worlds.

For developers, the message is clear: the second half of 2026 offers the best market conditions in years for mid-market launches. With pent-up demand, expanding credit, and recovering confidence, those ready to launch can reap significant results.

Sources consulted

Tags: Selic Financiamento Lançamentos
D

Diogo Bernini

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