One of Europe's leading development organizations will announce on Monday in Okinawa a new multi-million dollar investment that will boost Costa Rica's nascent mortgage market. DEG, a German project finance specialist, will provide a $20 million, 12-year loan to Banco Interfin, one of Costa Rica's biggest financial institutions.
The money, which will be lent to a special purpose vehicle, will allow Banco Interfin to grant more mortgage loans to poor families. While mortgage finance in Costa Rica is growing, access to long-term finance is still limited for such people.
The loan will be made to the Mortgage Trust of Banco Interfin. The trust buys the private housing loans of Banco Interfin. The bank, in turn, manages the trust's portfolio. "The sale of the loans improves the equity structure of Interfin, who will use the sales revenues to provide housing loans to families with lower and medium income. The project has a securitization-type character," reads a DEG statement.
DEG is a finance and consulting corporation involved in German development policy. The company, which is part of KfW, has as its goal to promote growth in developing and transition countries through private sector development. The establishment and expansion of private enterprise structures is an important focus.
The collaboration with Banco Interfin will help secure 500 permanent jobs in Costa Rica's private construction industry, as the bank mainly works with developers that create entire neighbourhoods. "The commitment strengthens Banco Interfin and thereby private sector development within Costa Rica's government-dominated finance sector," states DEG.