Interest rates on loans for consumers and mortgages in Cyprus saw an increase during July, according to data from the Central Bank of Cyprus (CBC). Specifically, the rate for consumer loans rose to 6.67%, up from 6.18% in June. Meanwhile, mortgage rates also climbed slightly, reaching 4.59% from 4.52%.
The CBC’s report highlighted contrasting trends in the financial market. While borrowing costs have gone up, the interest rates on deposits have decreased. Households saw a drop in rates for short-term deposits (those maturing within one year), which fell to 1.96% compared to 2.17% in June. Business deposits followed a similar pattern, with rates dipping to 2.28% from 2.35%.
The increase in lending rates has impacted both personal and business loans. Interest rates for consumer loans, typically used for personal spending or purchases, have gone up, as have mortgage rates for home buyers. Furthermore, business loan rates have also risen, with interest on smaller loans reaching 5.57% and rates on larger loans climbing to 5.64%.
Despite the higher borrowing costs, there has been a noticeable rise in new loans. In July, total new loans amounted to €595.3 million, an increase from €514.9 million in June. New consumer loans saw growth, reaching €28 million, and loans for home purchases increased to €134.3 million. However, loans to smaller businesses saw a slight decline, while lending to larger businesses grew significantly.
In conclusion, while Cyprus faces increasing interest rates, there is still robust demand for loans across various sectors, suggesting that higher costs have not yet deterred borrowing activity.
Source: Knews.kathimerini.com.cy