Between July and October 2020, the number of people in El Salvador exploring mortgage options online increased by 18%, and the number of Costa Rican consumers looking to buy credit cards decreased by 60%.
CentralAmericaData's interactive platform Consumer Insights monitors in real time the changes in consumer habits in all markets in the region and in other Latin American countries, with fundamental information to understand their behavior, new trends and anticipate eventual changes in their purchase patterns.
In the countries of the region, more than 8 million people are looking for credit on the Internet. Of this group of consumers, approximately 9% explore options for taking out a student loan.
The interactive information system developed by CentralAmericaData monitors in real time the changes in consumer habits in all markets of the region, with fundamental information to understand the new commercial environment that has emerged in an accelerated manner.
Following the entry into force of the Usury Law, the Central Bank published the maximum annual interest rates, which for credit operations in colons amount to 37.69% and 30.36% in dollars.
The law that was published on June 20, 2020 establishes the methodology to be used to set the maximum interest rate, and stipulates that the Central Bank of Costa Rica must publish on its website and on The Gazette, the maximum usury rates in the first week of January and July each year.
The coronavirus has left an economic impact in several countries. For this reason, some governments are developing exceptional measures to mitigate its effects. For example, the suspension of tax and mortgage payments to lessen the economic pressure on small businesses and households.
In the United States, interest rates were reduced to almost zero and a US$700 billion stimulus program was launched in a bid to protect its economy, says Mario Miranda, director of finance at MonederoSMART.
Managers of Costa Rica's financial institutions predict that due to the health crisis the country is going through, the demand for credit from companies and families will continue to fall in the coming months.
Figures from the Central Bank of Costa Rica state that between March 2019 and the same month in 2020, the balance of money lent by public and private banks to companies and families decreased by 2.3%, from $28,559 million to $27,908 million.
CABEI granted a loan that will be assigned to the country's state banks, resources that will be used to support the productive sectors in the context of the national emergency.
With the aim of strengthening the liquidity of state banks in the face of the national emergency caused by the covid-19 pandemic, the Central American Bank for Economic Integration (CABEI) authorized the disbursement of US$50 million for the Banco Nacional de Costa Rica and US$40 million for the Banco de Costa Rica, reported the international organization.
Although The Central Bank has been reducing the monetary policy rate to boost the issuance of bank credit, the speed with which the portfolio of loans in national currency grows continues to decrease.
Official data from the country's financial system indicate that by October 2017 the portfolio of loans in local currency grew to 14%, in the same month of 2018 the rate fell to 6% and by the tenth month of 2019 the increase was just 4%.
In Costa Rica, the growth of credit granted in U.S. currency to the private sector is the lowest in a decade.
Credit to the private sector does not show signs of recovery and, instead, the data available until August show an additional deterioration that took it to its lowest point in 10 years, reporting a year-on-year fall of -0.01%.
An analysis prepared by the advisory firm Frecuencia Económica indicates that the low growth is explained by the contraction of loans in dollars, since the portfolio in colones shows a 4.2% growth among the banking system, while the portfolio in dollars presents a fall of 3.9%.
Although the downward adjustments made months ago in the bank reserve and monetary policy rate do not yet appear to have had an effect on the loan portfolio in Costa Rica, banks expect credit to be reactivated soon.
Late loans granted by public banks to small companies amounted to 5.5% in May, 3.8% in the case of medium-size companies and 3.3% in the case of large companies, a situation attributed to the economic slowdown.
The percentage of credits reported by the General Superintendence of Financial Entities (Sugef), refers to loans that went into default for more than 90 days and judicial collection, granted by public entities such as the National Bank, Banco de Costa Rica and Banco Popular.
With the aim of making the classification of debtors more flexible and reducing the risk of non-payment, in a context where delinquent loans keep on rising, Costa Rica authorized the modification of two regulations that apply to entities in the financial system.
The General Superintendence of Financial Entities (Sugef) and the National Council of Supervision of the Financial System (Conassif), informed that changes were made to the "Regulation for the qualification of debtors" and the "Regulation on management and evaluation of credit risk for the development banking system", which ultimately aim to give access to new credits to about 63 thousand people.
In order to boost credit issuance, the Central Bank reduced from 15% to 12% the minimum legal reserve rate that institutions in the banking system must maintain as a reserve.
The new rate, which will come into effect on June 16 of this year, has not been reduced since 2002, and the authorities expect that this decrease will generate a greater availability of loanable resources in colones, as well as a reduction, for financial institutions, of the cost of raising funds in national currency.
In recent months, the credit portfolio of public and private banks in Costa Rica has been growing at a slower rate, partly because of high levels of indebtedness of the population.
According to figures from the Central Bank of Costa Rica, between October 2018 and March 2019 the year-on-year growth of credit has generally slowed, since the increase in the portfolio of private banks fell from 14% to 12%, in public banks the decline was from 1.37% to 0.75%, and in the case of other financial intermediaries the decline was from 8.86% to 6.97%.
In Costa Rica, low economic activity and rising unemployment explain the 25% increase reported between February 2018 and the same month of 2019 in the value of assets acquired by banks to recover loans.
Figures from the General Superintendence of Financial Entities (Sugef) specify that between February 2018 and the same month of this year, the amount of goods and securities acquired by financial entities because people and companies did not pay their loans increased from $425 million to $533 million.
Between May and September 2018, an increase was reported in the proportion of loans with payment arrears greater than 90 days, but between October and December the trend was downwards.
Data from the General Superintendence of Financial Entities (Sugef) indicate that between September and December 2018, the proportion of loans with payment arrears greater than 90 days, or in judicial collection, decreased from 2.58% to 2.14%.