The day before, the Ministry of Regional Development (MDR) reported that A package of measures is being prepared to improve the conditions for the Casa Verde e Amarela (CVA) programme.
XP highlights four main points of the volume announcement, listed below:
the first – 0.15% increase in CVA support multiplier, resulting in 12.5% to 21.4% growth in accrual depending on household income and region. The procedure is valid from June to December 31. The MDR also highlighted that it would not need approval from the FGTS Board of Trustees;
The second – A proposal to increase the household income limit for groups 2 and 3 of the CVA program, in which groups can benefit from R$4,001 to R$4,400 and from R$7,001 to R$7,700 with lower real estate interest rates;
Third – A proposal to increase the financing period from 30 to 35 years. However, this procedure depends on a legal amendment and requires approval by means of a temporary measure and
the fourth – The Ministry’s assessment on reducing real estate interest rates from 8.3% to 7.6% for the pro-shareholder line, which would improve accessibility, and become a hedge for a possible scenario of increasing interest in real estate financing for higher bands.
For Credit Suisse, the changes to be made are very positive and expected, especially given the withdrawal of builders from the sector due to inflationary pressure on costs (launches decreased 56% of total launch volume in the first quarter of 2021 to 42% in first quarter of 2022).
“The new support curve is a relief for the entire sector, as it increases the number of families eligible for the program, and supports an environment with better access. Therefore, companies have a greater potential to increase sales and reduce the impact of higher costs on margins. They remember the new scheduled adjustments, such as increasing the eligible income bracket, And grant a grace period of six months and extend the term of the loan.
According to the ministry, the new terms could boost CVA sales to 400,000 units by the end of the year (an increase of 300,000 compared to the current volume sold and a growth of 15% over 2021).
In this context, credit analysts have highlighted a preference in the MRV sector (MRVE3), whose Work was high the day before for them. In addition to the more favorable scenario with adjustments to the CVA program, analysts also see the possibility of estimating the upcoming role of the company’s US operations.
“We see these changes as positive for the program as a whole and reiterate our recommendation to buy names with exposure to the highest CVA (Cury and Directional) program,” the house analysts highlighted.
Shares of these companies posted solid gains today, also following a more positive session for the market as a whole. MRVE3 rose 6.35% to R$10.38, TEND3 rose 6.61% to R$5.32, while DIRR3 rose 6.95% to R$11.54. CURY3 and PLPL3 gained 5.48% (R$6.54) and 7.23% (R$2.67), respectively.
Bradesco BBI also welcomed the changes, as well as the government’s efforts to increase the attractiveness and feasibility of the Casa Verde e Amarela programme.
However, the bank’s analysts point out that there is no single initiative to fully offset ongoing cost pressures on homebuilders’ margins.
Therefore, they assess, discussions should not be limited to subsidies and may also include changes in terms of income classes and price ceilings, the maximum term for Caixa Econômica Federal financing through the FGTS and temporary rate cuts. This is in order to allow builders to charge higher costs to prices without significantly compromising affordability.
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