Three of Brazil’s largest banks announced the sale of BRL2.84 billion (approximately USD$1.62 billion) in mortgage loans to the Fundo de Gaurantia por Tempo de Servico (FGTS), the Government Severance Indemnity Fund. The 20-year deal only includes SBPE (tax free deposit scheme) mortgage loans made on residential properties with a maximum value of BRL200,000 and sold chiefly by Caixa Economica Federal, Banco Santander Brazil and Itau-Unibanco. The rate is TR+9.5 percent.

While CEF did its first small and shorter term securitization earlier this year, this large-scale sale of mortgage loans may be a cheaper alternative to raise funds for the growing mortgage sector than securitization.