SÃO PAULO, Brazil (By Andrew Downie, NYTimes) July 5, 2007 — Talk about an untapped market. Brazil’s new found economic stability and changes in lending laws are for the first time making it possible for the country’s working poor to buy their own homes. And using money that has been pouring in from foreigners who sense a lucrative investment — $4.8 billion since September 2005 — the country’s construction and real estate companies are building as fast as they can.

“There is a stronger demand for houses. There is a housing deficit, and now there are people with money to buy them,” said João Crestana, the vice president of urban development at Secovi, a leading confederation of constructors and developers in São Paulo state, Brazil’s most populous. “Companies can see there is a market.”

Although changes are sweeping through the industry, the biggest are evident in the market for houses and apartments intended for Brazilians earning up to five times the monthly minimum wage of 380 reais ($198), like Glauco Rodrigues and Alexandra Soldi.

Until recently, the young couple, who plan to get married Sept. 8, would have had little choice but to rent or live with one of their parents until they saved for their own place. Now, they are set to move into their own home early next year, a new two-bedroom apartment they are buying in the gritty north side of São Paulo.

For years, Brazil’s poor had little access to credit. And even if they could get credit, they could not hope to meet interest rates that were frequently among the highest in the world. That, combined with unemployment and underemployment, low pay and the instability brought on by regular economic crises, explain the explosion of favelas, the shantytowns scattered in and around Brazil’s urban centers.

But since Luiz Inácio Lula da Silva became president in 2003, interest rates have tumbled to 12 percent from 25 percent and appear set to continue falling. Inflation was 3.1 percent last year and is well under control. And both the minimum wage and workers’ salaries are rising at rates exceeding the cost of living, according to government figures, meaning workers have more disposable income. Buying a small home is finally a real possibility for many Brazilians.

“Credit is so readily available,” said Luiz Galfaro, co-president of Galfaro Empreendimentos Imobilarios, his family’s construction company, which is building the apartment that Mr. Rodrigues and Miss Soldi are buying. “Buying a house is getting to be like buying a car.”

Brazil’s construction firms are using the huge new investment by foreigners to help meet the growing demand. The country’s biggest mortgage financier, the government-run Caixa Econômica Federal, estimates that Brazil needs 7.9 million new homes. Ninety-two percent of those homes are needed by people who are classified as lower-middle income. Companies that once devoted their entire business to building chic residential properties for the cosmopolitan wealthy in São Paulo and Rio de Janiero are starting to construct smaller and cheaper homes in state capitals and the provinces.

Rodobens, a provincial firm specializing in the lower-middle income bracket, has plans to build 10,000 homes a year over the next four years, a fifteenfold rise on its previous annual total. Cyrela, a major Brazilian developer that raised 1.2 billion reais ($625 million) in a September 2005 initial public offering of stock and a second sale 10 months later, added lower-income properties last year to its portfolio of middle, high-income and luxury homes. And Gafisa, Brazil’s second-biggest developer, created two new companies last year specifically aimed at building homes for the less well off.

“We are redirecting our efforts to that lower-middle-income sector,” said Wilson Amaral de Oliveira, Gafisa’s chief executive. “All the big companies are moving in that direction because it is going to bring us more business. And it’s not a bubble, it’s sustainable. Just look at the demographics.”

The demographics show that the number of people ages 25 to 50 — a strong indicator of future demand — will grow over the next 20 years, meaning more and more people will reach the age when they want their own home.

Mortgages are still rare in Brazil, with bank loans for house purchases representing just a tiny fraction of the country’s gross domestic product. Those few who did qualify for mortgages customarily got loans over a maximum of 15 years at interest rates well into double figures. Home buyers needed to put down around 35 percent of the property’s value.

Now, though, banks and other lenders are loaning up to 80 percent of the property’s value, allowing borrowers up to 30 years to pay them back and offering fixed interest rates for the first time.

Mr. Rodrigues and Miss Soldi, for example, put down 16,000 reais (about $8,300) and have a 20-year mortgage. They will pay it back at 990 reais ($515) a month, about the same they would pay in rent.

“Our intention was always to buy because it is hard to find somewhere that is good to rent, and nowadays what you pay in rent is what you pay in mortgage,” Mr. Rodrigues said as he anxiously viewed the half-finished property. “And with a mortgage, at the end it’s yours.”

Banks are lending more thanks in large part to a 2004 law that makes it easier for them to seize property from borrowers who fail to repay their loans. Previously, repossessing homes took banks six to eight years. Now it can take less than a year.

The law is also important because it overturned legislation that permitted any home buyer taking legal action against a lender to suspend all repayments. Banks were afraid to lend to all but the most trustworthy borrowers for fear they would get caught up in legal disputes that would take years to unravel.

“Banks now have much more security to finance,” said Décio Tenerello, president of the Brazilian Savings and Loan Trade Association. “That law means Brazil now has one of the most modern mortgage systems in the world.”

Confirmation comes in the lending figures. The number of houses financed by Caixa Econômica Federal more than doubled in three years, to more than 600,000 last year from 261,327 in 2003. The amount lent by the bank doubled in the first three months of this year over the same period in 2006.

The only possible downside is the chance that the newfound investment will drive up land prices. Carlos Peyrelongue, an analyst for Merrill Lynch, warned that the influx of cash could push up prices, although he said that such oversupply would probably come only at the higher end of the market and that “three to four years out, there is enough pent-up demand to take on the supply.”

For now, developers are optimistic.

“There is an affordability for those in the low-income sector who want to buy houses,” said Luis Largman, the chief financial officer at Cyrela. “We didn’t operate in the low-income sector, but now we do. We are making up for lost time.”