Interest rates on CLT loans soar after new rule and surprise government

The new type of payroll loan aimed at private sector workers, in force since the end of April , saw a spike in average interest rates in the first full month of operation, according to data from the Central Bank. The rates exceeded the values ​​practiced previously by more than 15 percentage points and went against what the government expected.

According to the monetary authority, the annual rate of the so-called "Consignado CLT" jumped from 44% to 59.1% between March and April, which is equivalent to 3.94% per month. The head of the Central Bank's statistics department, Fernando Rocha, said that this surge is a reflection of the risk that banks are seeing in the debt profile and indebtedness of private workers.

“[The new line] expanded the range of customers and created a very significant demand [for payroll loans]. The banks probably assessed that this range of customers had a worse debt profile, indebtedness or payment conditions than those who were already in this modality,” he said in a press conference this Thursday (29).

Despite the significant increase in the cost of credit, demand grew during the period, with the total volume lent rising 7.4% to R$45.2 billion. As a result, the total stock of payroll loans, which also includes INSS retirees and public servants, reached a historic high of R$704 billion.

Rocha's analysis is shared by the Ministry of Finance, which assesses that the expansion of the base of workers with access to the product – from 4 million to around 47 million potential borrowers – changed the risk profile of the operations.

“The risk profile of new operations contracted in this specific line has changed significantly,” the ministry reported, adding that companies previously eligible for payroll deductions had a “greater stability profile” and “lower credit risk.”

Despite the initial increase in interest rates, the Central Bank projects a possible reversal in the coming months, with the entry into force of the use of the Severance Pay Guarantee Fund (FGTS) as collateral for loans. The expectation is that the resource will come into effect in July.

“It is reasonable to expect that, when the option of a guarantee in the FGTS is fully operational, this movement will be reversed,” said Rocha.

Increase in default

The Central Bank also revealed that the average default rate on credit operations increased between March and April, rising 0.3 percentage points to 3.5%. Default rates increased among both companies (from 2.2% to 2.5%) and families (from 3.9% to 4.1%), with an increase in operations with free resources (from 4.5% to 4.8%) and earmarked resources (from 1.5% to 1.7%).

Despite this, Rocha considered that “it is still too early” to say whether the data marks the beginning of a new cycle of rising default rates.

Amid this scenario, the 12-month accumulated growth of the bank credit stock showed a slight acceleration in April, although still below the peak recorded in February. The increase in bank credit concessions, seasonally adjusted, was 3.1% in the month and was classified as “strong” by the Central Bank.

Among the loans to companies, the Advance on Exchange Contract (ACC) and export financing lines stood out.