In July 2025, Cyprus experienced a decline in housing loan rates while consumer credit costs increased, as reported by the Central Bank of Cyprus.
- In July 2025, Cyprus experienced a decline in housing loan rates while consumer credit costs increased, as reported by the Central Bank of Cyprus.
Consumer Credit Costs on the Rise
The latest statistics reveal that the interest rate for consumer credit rose to 7.40 per cent in July, up from 7.01 per cent in June. This increase comes amidst a backdrop of declining new lending volumes across the board.
Household and Corporate Deposit Rates
Average interest rates on household deposits with an agreed maturity of up to one year dropped to 1.08 per cent, compared to 1.13 per cent in June. Conversely, deposit rates for non-financial corporations saw a slight increase, rising to 1.21 per cent from 1.18 per cent the previous month.
Shifts in Housing Loan Rates
While consumer credit rates escalated, the average interest rate on loans for house purchases decreased to 3.87 per cent, down from 3.95 per cent in June. The Central Bank noted that the loan portfolio for house purchases encompasses various types, including loans for primary residences and holiday homes, which carry differing levels of risk and interest rates. Consequently, changes in the portfolio composition can influence the weighted average rate independently of banks’ adjustments in rates.
Corporate Lending Rates
For non-financial corporations, loans up to one million euros carried an average interest rate of 4.29 per cent, a slight decline from 4.39 per cent in June. In contrast, loans exceeding one million euros registered an increase to 4.29 per cent, compared to 4.04 per cent a month earlier.
Significant Drop in New Lending Volumes
July 2025 saw pure new lending volumes plummet to €445.3 million, down from €743.5 million in June. This decline is stark when compared to the €642.8 million recorded in June. Specifically, new loans for consumption experienced a minor increase, rising to €24.9 million from €26.8 million, while housing loans fell to €125.1 million from €185.9 million in the prior month.
Non-Financial Corporations Face Lending Declines
New loans to non-financial corporations for amounts up to one million euros fell to €57.3 million, down from €86.9 million. For loans exceeding one million euros, the figures dropped sharply to €230.9 million from €425.4 million, compared to €420.6 million in June.
Comparative Interest Rates within the Euro Area
When compared to other countries in the euro area, Cyprus’ loan interest rates remain close to the median. The average rate on outstanding household loans in Cyprus was 4.05 per cent in July, slightly above the euro area average of 3.96 per cent. For outstanding loans to non-financial corporations, the average stood at 4.31 per cent, compared to the euro area’s average of 3.79 per cent.
Implications for Consumers and Corporations
The increase in consumer credit costs may present challenges for individuals seeking to borrow, while the decrease in housing loan rates could provide some relief for homebuyers. Corporations may find varying interest rates on loans, which could influence their borrowing decisions moving forward.
Looking Ahead
As these trends continue to unfold, the Central Bank of Cyprus will be monitoring the situation closely. Adjustments in interest rates and lending volumes will be pivotal in shaping the economic landscape in Cyprus in the coming months.
