Brazil Announces Minha Casa Minha Vida 3
September 10, 2015
The government has announced the third phase of its low income housing program Minha Casa Minha Vida (MCMV), its loan-linked demand side subsidy program. While details on amount and distribution of units across segments are still to be provided, some important changes were made to the second phase MCMV. First, the income ceiling for the highest income bracket was increased from R$5,000 monthly income to R$6,500, adding a large proportion of the population that was previously excluded from the market but has a higher propensity to access a loan at the new rate of 8.0% + TR. This will allow prices of houses under the MCMV to increase. Second, the lower income bracket was split in two with a new bracket of households with incomes up to R2.350 who will qualify for a maximum subsidy of R45,000 per unit and interest rates as low as 5 percent. These changes will improve the scaling of subsidies by income bracket and reduce the overall subsidy amount for the program and, therefore, fiscal costs.
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