The main financial institution in Cyprus, the Bank of Cyprus, has announced a reduction in the base rate for loans linked to the European Central Bank (ECB) rate.
Instead of 4.25 per cent, loans will now be charged at 3.65 per cent. The changes will take effect from Wednesday 18 September. It is expected that the immediate 0.6 per cent reduction in the base rate will have a positive impact on the financial situation of Bank of Cyprus customers, as their monthly loan payments will be significantly reduced. According to preliminary calculations, around 10,000 borrowers will benefit.
It is worth noting that the Bank of Cyprus has also started to reduce Euribor-linked mortgage rates.
Thus, last month, Euribor, which peaked at 4.14% in October 2023, now stands at 3.27%. The downward trend is expected to continue.
Note that, according to the ECB, interest rates on loans to households in Cyprus fell by 0.71% between January and July. However, this is significantly higher than the EU average of 0.12%. The Bank of Cyprus stressed that lower interest rates contribute to economic growth and ease the financial burden on customers, so the financial institution will continue to support the local economy by offering competitive rates and flexible financing terms.
The ECB's reduction of interest rates, after curbing inflation, signals lower borrowing costs and indirectly stimulates economic growth, Bank of Cyprus added.
Finally, the bank said that in previous periods of rising interest rates, Bank of Cyprus has assisted thousands of its customers by adjusting the terms of their loans to help them cope with increased repayments.