Household debt hits record high, Central Bank says

Regarding income commitment, which considers the average amount for debt payments in a month relative to household income, the indicator reached 29.7%, surpassing the previous record of 29.5% set in January. This marks the highest level since the series began in 2005. The indicator has been on an upward trend since early 2024. In February of that year, income commitment was at 26.6% and increased to 27.8% in the same month of 2025.

The indicators of income commitment and population debt have drawn the government’s attention, which is preparing a program focused on debt renegotiation. According to Finance Minister Dario Durigan, the program is expected to be launched this week by President Lula.

Household debt also continued to rise, reaching a record 49.9% in February. This indicator considers the total debt of individuals divided by their annual income. In January, it was at 49.8% of income.

Jucelia Lisboa, an economist and partner at Siegen Consultoria, notes that income growth has not been sufficient to absorb the rising cost of living and financial services. Additionally, high interest rates are straining household budgets. Lisboa also points out that the expansion of credit is more concentrated among families and consumer-oriented lines. “This movement supports economic activity in the short term but increases families’ sensitivity to income and interest rate shocks, making debt more persistent in the absence of structural improvements in repayment capacity,” she says.

The Central Bank’s credit statistics more broadly showed that the average bank interest rate continued to rise. The rate reached 33.1% per year in March, up from 32.9% the previous month. The increase was concentrated in directed credit modalities, impacted by the rise of the Long-Term Rate (TLP) from the Brazilian Development Bank (BNDES), according to Fernando Rocha, the Central Bank’s head of statistics. The TLP has a variable component calculated by inflation, and Brazil’s 12-month official inflation (IPCA) rose to 4.14% in March from 3.81% in February.

“This [TLP increase] directly translated into higher interest rates for directed credit. The spreads [difference between lending rates and funding rates] for directed credit remained stable,” said Rocha. “If the interest rate grew by 0.7 percentage points and the spread varied zero, it means the funding cost also grew by 0.7 points.”

The nominal growth rate of the credit balance over 12 months, which had been declining, saw an upward change from 9.6% to 9.7% between February and March. Rocha says it is necessary to wait for data from the coming months to determine whether the movement has been interrupted or if the stability was temporary.