PEIC: 78.8% of families are in debt; default has stability

Despite the debt, the data shows that default rates have stabilized. The percentage of families with outstanding debt remained at 28.6% for the second month, below the percentage in May 2023.

In the assessment of the economist at FGV’s Brazilian Institute of Economics (IBRE), responsible for the Consumer Survey, Anna Carolina Gouveia, the stability of default suggests the possibility of a reduction in debt in the coming months, due to the improvement in income and control of inflation.

“This result suggests that, if this trend continues, more people may be able to reduce their debt in the coming months as income continues to improve, inflation continues to be controlled and consumers are able to reorganize themselves again to be able to stop being in debt, to be able to pay your bills or to be able to consume goods, products and services”, highlights Anna Carolina Gouveia.

Consumer confidence: calamity in RS influences fall in May

For the Head of Commercial Intelligence Strategy, Ícaro Coelho, the fall in the Selic rate is associated with household debt in May.

“The fall in the Selic rate, which went from 13.75% to 10.50%, facilitated access to credit, increasing demand for loans and financing. Clearly, this ended up generating family debt due to the false perception of a lower cost of credit”, says Ícaro Coelho.

He predicts growth in the level of debt. “For the next (months), it is expected that the percentage of debtors will continue to grow, reaching 80.4% by December 2024”, he estimates.

Debts in arrears

According to the survey, the percentage of families with debts in arrears for more than 90 days had a slight drop of 0.1 pp compared to the previous month, reaching 47.3% of the total debtors in May 2024.

On the other hand, there was an increase in the proportion with delays between 30 and 90 days to 29.2%. In this case, the average delay time has been reduced, reaching 64 days in May. Ícaro Coelho explains that this greater payment condition may be linked to reduced interest rates and greater financial awareness among families.

“The greater payment conditions, with a reduction in the average length of months of delay to 64 days, is generally linked to greater financial awareness among families and the reduction in interest rates, allowing better conditions for negotiating debts, in addition to government programs that facilitate payment”, says Ícaro Coelho.

FGV’s MBA professor, Myrian Lund, points out that the action of financial institutions in relation to debts, with a view to renegotiation, contributes to reducing defaults. She also points out the government’s solutions to renegotiate Brazilians’ debts.

“So, there was action by the government and there is action by banks, increasingly proactive, even using a little behavioral finance with the public who are late in their accounts”, assesses Myrian Lund.

Crop by region

The state that had the highest level of debt was Roraima (89.9%) in the month. In May, 16 federative units presented a percentage above the national result.

In relation to default, Rio Grande do Norte was the state with the highest number of families with overdue bills (53.8%). The highest level of families unable to pay late debts (20.0%) was recorded in the state of Amazonas.