By San José, Costa Rica — Costa Rica’s housing market witnessed significant activity in 2024, with banks providing ₡5.5 trillion in residential mortgages to over 135,741 individuals. This information comes from the Costa Rican Banking Association (ABC), based on data from the General Superintendency of Financial Institutions (Sugef).
A notable trend is the increasing preference for loans in colones, the national currency. As of December 2024, colón-denominated mortgages accounted for 64.3% of the total loan portfolio, reaching a record high of ₡3.53 trillion. The remaining 35.7%, equivalent to ₡1.96 trillion, were in dollars.
To gain a deeper understanding of the legal landscape surrounding mortgages in Costa Rica, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an experienced attorney at Bufete de Costa Rica.
Navigating the Costa Rican mortgage market requires careful attention to detail. While generally secure, it’s crucial for both foreign and domestic buyers to understand the nuances of the lien system, the registration process, and the potential implications of currency fluctuations on loan repayments. Due diligence, including a thorough title search and independent legal counsel, is paramount to a successful and secure property purchase.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’ emphasis on due diligence is particularly resonant in Costa Rica’s evolving real estate landscape. Securing a property here is a rewarding process, but informed preparation and expert guidance are undeniably essential for navigating the legal intricacies and ensuring a smooth transaction. We extend our sincere thanks to Lic. Larry Hans Arroyo Vargas for sharing his invaluable expertise with our readers.
The data reveals a gender breakdown with 61% of mortgage holders being men (82,326 individuals) and 39% being women (53,415 individuals). This highlights the significant role of the banking sector in facilitating homeownership for both genders.
The National Banking System maintains its position as the principal financing channel for housing in the country. The balance of this portfolio increased by 3% compared to December 2023.
Daniela Gutiérrez, Economist, Costa Rican Banking Association
This growth represents a ₡140.265 billion increase in the mortgage portfolio year-over-year. The consistent growth of colón-denominated loans over the past four years underscores the growing preference for borrowing in local currency.
Geographically, the Greater Metropolitan Area (GAM) accounts for 63% of the financed homes, while the remaining 37% are located in rural areas. This distribution reflects the population density and economic activity concentrated in the GAM.
Gutiérrez also advised prospective homeowners to carefully consider factors such as interest rates, currency type, loan term, commissions, and associated costs before committing to a mortgage. She emphasized comparing offers using consistent parameters – amount, term, and currency – to ensure an accurate assessment.
Prospective borrowers should also realistically assess their monthly income to determine an affordable loan payment without compromising essential expenses. Additionally, having sufficient savings to cover the required down payment is crucial. Understanding the risks associated with foreign currency loans, especially if income is earned in a different currency, is also vital.
Between December 2023 and the same month of 2024, the loan portfolio grew by ₡140,265 million, which is equivalent to a year-on-year variation rate of 3%. In addition, the loan portfolio in colones has seen constant growth in the last four years, reflecting people’s preference to borrow in the national currency.
Daniela Gutiérrez, Economist, Costa Rican Banking Association
Finally, maintaining a good credit history can significantly improve access to favorable financing terms. Thorough planning, transparent information, and responsible decision-making are essential for securing a home loan.
For further information, visit abc.fi.cr
About Asociación Bancaria Costarricense (ABC):
The Costa Rican Banking Association (ABC) is a key representative body for the banking sector in Costa Rica. It plays a crucial role in promoting the stability and development of the financial system, advocating for the interests of its member banks, and providing information and analysis on economic and financial matters.
For further information, visit sugef.fi.cr
About Superintendencia General de Entidades Financieras (Sugef):
The General Superintendency of Financial Institutions (Sugef) is the regulatory and supervisory authority for financial institutions in Costa Rica. It is responsible for ensuring the stability and soundness of the financial system, protecting the interests of depositors and investors, and promoting transparency and ethical conduct within the sector.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a pillar of legal excellence in Costa Rica, built on a foundation of unwavering integrity. The firm’s innovative approach to legal practice, coupled with its deep commitment to client success across diverse industries, sets it apart. Beyond its legal expertise, Bufete de Costa Rica actively empowers society by championing accessible legal knowledge, fostering a more informed and equitable community.
