The new law eliminates the minimum legal reserve amount required by the Central Bank of Costa Rica (15%) for funds destined for home loans.
The application of the new law for middle class housing signed yesterday by the Costa Rican government is in the hands of financial institutions who provide loans for house purchases, which still must consider what returns they will obtain.
The economic dynamism of the last half of 2011 and the first of 2012 has generated more demand for loans, particularly in dollars.
Dollar loans reported an increase of 16% (17% excluding the currency effect), while for loans in colones the increase was 14%.
Mario Rivera, manager of the Banco de Costa Rica, told Nacion.com that the preference for dollar credit is being driven mostly by companies with strong links to international trade (import and export) and the domestic demand for imported goods.
Commercial banks loaned $84 million between January and August; in the same period of 2008 they gave credits for $302 million.
Mario Rivera is the President of Casalco, the Salvadoran Construction Chamber. He argues the government's anti-crisis plan does help his sector, but it is not enough.
"Builders believe the solution lies in approving the law for Preferential Interests, with which anyone getting paid minimum wage could get a loan to buy a house", reports Elsalvador.com.
According to Banks, the change in the calculation of the reserve will increase the costs of the financial intermediaries and will reduce the supply of credit.
The Central Bank of Costa Rica modified the methodology used to calculate reserves, implicating that, beginning next July 1st, Banks must have deposited in the Central Bank, at the end of each day, deposits of no less than 97.5% of the minimum legal reserves for the previous month.
The Superintendent of Financial Institutions of Costa Rica reported that the repossession of property for unpaid debts rose 77% from February 2008 to February 2009.
The increase in auction advertising for goods recovered by the banks is well-known, especially for real estate and cars whose owners cannot continue to make the monthly payments due to loss of income, unemployment and primarily because of the increase in interest rates.