The volume of new loans issued by Cypriot banks reached €4 billion by the end of October 2025, marking the highest level in the past decade. Interest in borrowing has increased not only among households but also among companies, with corporate lending rising by more than 50%. This surge is driven by falling interest rates, improved consumer confidence, and the continued strength of the real estate market, which attracts both local and foreign buyers.
According to the Central Bank of Cyprus, new loans reached €4.1 billion in the first ten months of 2025, compared with €2.9 billion during the same period in 2024. The year 2024 was also strong, with a historic €3.9 billion in new loans — the best performance since 2015.
Loans become “healthier”: banks tighten risk management
Unlike the period before the banking crisis, Cypriot banks now prioritise borrowers’ financial stability. Loans are no longer issued solely against collateral — a practice that once led to a rise in non-performing loans. Today, banks assess clients’ actual repayment capacity, and the results are clear: over 90% of all loans are serviced without delays, and the share of problem loans remains minimal despite the sharp rise in lending volume.
Consumer lending grew by nearly 18% in the first ten months of 2025, reaching €1.4 billion. Corporate lending saw an impressive 53% increase, rising to €2.7 billion, up from €1.7 billion in 2024.
Restructuring activity also rises alongside loan growth
Loan restructuring has increased parallel to the expansion of credit activity. Households carried out restructurings totalling €669.8 million, compared to €466.3 million a year earlier. In the corporate sector, restructured loans reached €2.1 billion, up from €1.5 billion last year.
Economists note that the rise in restructurings is driven not by financial distress but by borrowers’ desire to take advantage of lower interest rates and improve their repayment terms.
October figures: slight slowdown, but demand remains high
Despite strong annual growth, October 2025 saw a moderate decline in net new lending: €429.4 million, compared with €447.9 million in September. However, consumer loans continued to grow, reaching €23.7 million. Mortgage lending also showed a notable increase — up to €117.5 million, reflecting sustained interest in home purchases amid stabilizing property prices.
Loans to non-financial companies showed mixed trends:
- Loans under €1 million decreased to €50.8 million.
- Loans over €1 million fell to €232 million.
Experts attribute this to the adjustment of large investment projects that were particularly active in the first half of the year.
Economic outlook: what awaits the credit market in 2026
Financial analysts forecast that lending activity will remain high in 2026, although growth rates may moderate as interest rates in the eurozone stabilise. Demand for mortgages is expected to remain strong due to the expansion of sustainable construction programmes and new environmental standards. The corporate sector will continue to play a leading role, driven by projects in real estate, tourism, and green energy.