Costa Rica state bank slashes interest

January 30, 2009

A state bank announced Monday a series of highly attractive loans for small businesses and would-be homeowners, an effort to reduce defaults and seduce new borrowers.

Beginning in March, Banco de Costa Rica will decrease interest rates on new home loans by 3.25 percentage points. Interest rates on loans of up to ¢50 million ($91,000) for small- and medium-sized businesses will drop by 5 percentage points.

Responding to a request by President Oscar Arias, the bank will also cut by 2 percentage points interest rates on existing home loans and loans for small businesses. The new policy began Sunday and will be in place for two years.

Under both programs, during the first year, rates for home loans will be capped at 15 percent and rates for small businesses will be capped at 17 percent. The rates apply only to loans in colones, not dollars.

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