CR Resident Financing:  Expo Construccion 2008  

In the past, the "Expo" has been a great chance to find the latest and greatest deals on mortgages for both residents and non-residents.  This year, however, it did not serve as a major platform for Costa Rica banks to launch new products for non-residents.  This is primarily a consequence of the banks actively competing these days and the fact that Expo-Construccion has become more and more an event for CR residents....where end consumer attendees are concerned.

The weakened dollar and pessimism surrounding its' future, however, is motivating many Costa Rica resident borrowers to favor mortgages in colones over dollars (a new phenomenon).  Banks are responding quickly and leveraged Expo Construccion 2008 as an opportunity to debut their much revised Colon based loan programs.  Many banks are now presenting Costa Rica residents with the opportunity to convert their existing dollar mortgages into colones.  There has actually been a lot in the Costa Rica financial press lately about the movement of local borrowers from dollars to colones for all forms of consumer credit.  The flight towards currency stability is not just limited to Costa Rica home owners.

Colon based mortgages being promoted are currently priced with interest rates 2-4% higher than dollars. This is about half of the rate spread from one year ago, when the gradual growth of the colon:dollar exchange rate was believed predictable and linked to Costa Rica's relatively constant (in recent years) inflation rate.

CR Non-Resident Financing: Fundamental Change Underway in 2008

Principal boundaries which define Costa Rica's financing industry are rapidly being redrawn. Foreign lenders are entering the market and established lenders are restructuring their products.

Cross border market forces swiftly continue to drive market maturation, with major financial institutions striving to realize gains only available in "inefficient markets".   Costa Rica banks are beginning to do away with the loan conditions which have historically provided "headlines" for critics of their programs.  Most notably, Life Insurance is no longer required by two of the leading lenders in the market (it has not been a legal requirement for Costa Rica banks since November, 2006).  One of these lenders has done away with the maximum age limit of 64 as well, expanding the availability of attractive financing to a critical segment of the retiree market.  Almost all of the leading lenders in Costa Rica have also recently expanded their programs to provide financing to foreigners from all over the world.  Up until recently, these programs were strictly limited to US and Canadian citizens.

Additionally, eight months ago, there were no fixed rate mortgages of any kind offered to foreigners.  Not only are there now multiple lenders offering 5 yr fixed term ARM's (at 8% initial rate), but one lender has even launched a 15 yr fixed rate program. A long term fixed rate mortgage is truly a major advancement in the portfolio of options available for residential real estate financing in Costa Rica.

 
Multiple US lenders have begun piloting Costa Rica non-resident loan programs.  Though these initial programs are generally quite focused in terms of borrower qualifications and property types, they represent a major milestone in the history of non-resident financing.  Additional programs, as well as competing international lenders, will continue to enter the market as it continues to mature through 2008. 

Costa Rica Mortgage enjoys great relationships with all of the established lenders offering financing in Costa Rica, as well as new market entrants.  We take pride in being the only such firm in Costa Rica.  We are dedicated to pairing every client with the financing option which best suits their needs and circumstance.  Access to all of the available options, insight into underwriting guidelines and established relationships are the elements which uniquely enable us to routinely deliver on that goal.

We Look Forward to Simplifying Your Costa Rica Financing!