The Federal Reserve’s (Fed) September 15–16 meeting minutes, released on Wednesday (7), indicate that interest rates could remain higher for longer. Most policymakers considered another rate increase likely by the end of 2026, suggesting that global financial conditions may ease more slowly than previously expected.
At the meeting, the committee unanimously approved a 0.25-percentage-point rate increase, bringing US interest rates to a range of 3.75% to 4%. According to the minutes, policymakers saw insufficient progress in bringing inflation down toward the Fed’s 2% target. The Fed’s staff raised its inflation projections for the coming years and pushed the expected return to the target back to 2029. The document does not indicate when the next increase might occur, and recent data suggest that a move as early as October is unlikely. The Fed’s next decision is scheduled for October 28, following a two-day meeting of the Federal Open Market Committee (FOMC).
Persistent inflation helps explain the Fed’s cautious stance. According to the minutes, headline personal consumption expenditures (PCE) inflation was estimated at 3.8% in August, while core PCE inflation, which excludes more volatile components, stood at 3.4%. The Fed’s staff projected that inflation would converge toward the 2% target only in 2029.
Brazil’s real estate market is highly sensitive to the cost of borrowing. The prospect of US interest rates remaining elevated is likely to keep global financial conditions tighter, potentially putting pressure on exchange rates and market interest rates in emerging economies such as Brazil. This environment could push Brazilian long-term interest rates higher and limit the scope for a faster reduction in the Selic rate, depending also on domestic conditions, including inflation, the exchange rate, economic activity and fiscal outlook. Brazil’s benchmark interest rate serves as a reference for mortgage financing, credit for property developers and the returns offered by competing investments, such as fixed-income securities.
Brazilian interest rates have remained elevated for years, reaching a nearly 20-year high of 15% per year in mid-2025. Since then, the country’s monetary policy has followed an easing path, with the benchmark rate reaching 13.75% per year after a 25-basis-point cut at the most recent meeting. During this period, Brazil has continued to experience economic growth and low unemployment. However, markets have been anticipating further rate cuts, particularly to unlock investment in infrastructure and real estate.
This outlook was based on expectations that global and US interest rates would remain stable or decline. The prospect of an increase in US rates is now calling that scenario into question. A slower rate-cutting cycle would delay relief in monthly mortgage payments for prospective buyers. It could also keep borrowing costs for property developers elevated, making it more difficult to raise new capital or attract investment and affecting decisions related to property launches, construction projects and new investments. When interest rates remain high, real estate faces stronger competition from fixed-income investments, increasing the opportunity cost of capital for investors.
The impact, however, varies across segments of the real estate market. In the high-end segment, buyers who rely more heavily on their own funds tend to be less sensitive to increases in borrowing costs. Their purchasing decisions may depend more on the opportunity cost of capital, expectations for property appreciation and their assessment of market conditions. By contrast, consumers who depend more on credit may feel the impact of high interest rates directly through larger monthly payments. Some may postpone purchases while waiting for more favorable financing conditions.
According to Luccas Isnard, CEO of Vizu Imobiliária Boutique, a prolonged period of high interest rates does not eliminate demand for real estate but changes how buyers assess opportunities.
“When the cost of money remains high, consumers tend to examine property prices, payment terms and appreciation potential more carefully. In the high-end segment, where buyers rely more heavily on their own funds, the impact of credit conditions may be more limited. However, the opportunity cost of capital carries even greater weight in the decision,” he says.
“For Brazil’s real estate market, the key point is that elevated international interest rates can prolong an environment of more expensive credit, but they do not determine buyer behavior on their own. Demand also responds to income, employment, confidence and the terms offered in each transaction. In a more selective market, buyers tend to focus less on price alone and more on the relationship between value, asset quality, location and appreciation potential. Buyers who depend more heavily on financing, meanwhile, may prefer to wait for an improvement in credit conditions,” Isnard says.
The market will be watching the Fed’s October 28 decision, upcoming US inflation data and the Brazilian Central Bank’s response to the external environment. For Brazilian homebuyers and international investors, the main implication is not an immediate change in financing conditions, but the possibility that borrowing costs will decline more slowly than expected. In the high-end segment, sensitivity to financing costs tends to be lower, but elevated interest rates increase the opportunity cost of capital and may make buyers more selective.
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