Consumer loan delinquencies hit record in August
Consumer delinquencies on bank loans, a major issue in this year’s election campaign, reached a new high in August, Central Bank data show.
Among non-earmarked loans, where interest rates are freely negotiated by lenders, the share of individual borrowers more than 90 days behind on payments rose to 8% in August from 7.8% in July, the previous peak. Overall consumer delinquency climbed to a record 6% from 5.8%.
The data also show that, despite the recent cycle of cuts in the Selic benchmark rate, the economy’s average lending rate snapped a three-month decline and rose 0.2 percentage point in August to 32.3% a year. The increase reflected stronger growth in riskier forms of credit, including revolving credit-card balances and installment plans.
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The rise in delinquencies and borrowing costs comes as the federal government, just ahead of the presidential election, launches a third edition of Desenrola, its consumer debt renegotiation program.
Desenrola Brasil 3.0 will cover the purchase and restructuring of debts that have been overdue for between two and four and a half years. Two previous versions have been launched since 2023.
The latest phase will focus on credit-card debt, both installment and revolving balances, as well as unsecured personal loans of up to R$10,000. The government estimates that as many as 15 million people could benefit, with up to R$150 billion in debt eligible for renegotiation.
Costlier credit
The breakdown of the data shows that Brazilians are increasingly turning to more expensive forms of emergency borrowing.
The clearest example is revolving credit-card debt, which is used when cardholders do not pay their full monthly bill. Among non-earmarked loans to individuals, revolving credit-card balances posted the strongest increase in August, rising 4.8% from July.
The average interest rate on this type of credit jumped 8.7 percentage points in the month to 444.9% a year. Delinquencies also rose, reaching a record 66.2% in August from 65.5% in July.
Across all lending categories, the increase in average rates was driven by non-earmarked credit, where rates rose 0.8 percentage point to 48.5% a year, and by loans to individuals, up 0.7 point to 38.2%.
The Central Bank also reported higher borrowing costs on credit-card installment plans, which split outstanding balances into fixed monthly payments. Rates rose to 192.1% a year in August from 189.3% in July, making it the second-most expensive type of credit in the market.
Among non-earmarked loans to individuals, which include revolving and installment credit-card debt, the delinquency rate increased to 8% from 7.1% over the same period.
Payment stress
For payroll-deducted personal loans to private-sector workers, the delinquency rate rose to 10.6% from 10%. The rate on unsecured personal loans increased to 11% from 10.6%, while overdraft delinquencies declined to 15.34% from 16.31%.
Juliana Inhasz, an economist and professor at Insper, said that although the labor market remains strong and inflation continues to ease, household income “is not entirely sufficient to cover expenses.”
“A lot of people are employed, but average incomes are still low,” Inhasz said. “[Expenses for] food, healthcare, housing and household costs have risen sharply in recent years, with a high cost of living for lower-income groups.”
Marcela Kawauti, chief economist at Lifetime Gestora de Recursos, said the delinquency data illustrate how the Selic rate’s prolonged stay at 15% from June 2025 through March 2026, put pressure on household budgets. The benchmark rate now stands at 13.75%.
“This raises a warning about how moderate the economic slowdown will be from here, because high interest rates can cause the wheel [of the economy] to stop turning abruptly, with people having to direct part of their salaries toward interest payments,” Kawauti said.
Broader trend
Roberto Luis Troster, coordinator of the Fipe Center for Studies on Brazilian Corporate Debt, or Cefeb, noted that indebtedness has been rising since 2021, both during periods of “low Selic” and “high Selic,” even as unemployment has remained near record lows and economic activity has expanded.
The Central Bank has also promised measures in the coming months to address household borrowing through costly credit lines such as credit cards and unsecured personal loans.
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“Without macroprudential measures, it will be very difficult for these people to escape this cycle,” Central Bank Chair Gabriel Galípolo said in an interview last week. “It is important to create preventive and transparency measures that build awareness when people take out these credit lines, as a matter of consumer protection and financial citizenship.”
Household burden
Household indebtedness, measured as outstanding debt relative to income accumulated over 12 months, rose to 49.9% in July, up 0.2 percentage point from June and 1.1 points over 12 months.
The debt-service ratio — the estimated average amount used to repay debt as a share of average income — was unchanged from June at 28.7% in July. It was up 1.4 percentage points over the previous 12 months.
Outstanding credit in the National Financial System, or SFN, rose 0.5% between July and August to R$7.39 trillion. The increase was led by earmarked lending, which grew 0.8%, and credit to individuals, also up 0.8%.
The Finance Ministry and the Central Bank did not comment.
