After much debate and discussion, the Cyprus Banking Association announced that local financial institutions have decided to impose a moratorium on the sale of mortgaged properties whose owners are in a difficult situation as they are unable to obtain home titles in any way.
As a result, many borrowers have been given another reprieve. This time until 31 July 2025. The authority said that the main objective was to support the efforts of the government and the Central Bank of Cyprus in the issue of collateral sales. It should be noted that this is not the first month that officials have debated the expediency of selling problem properties.
As it turned out, the chairman of the legal affairs committee recently asked the director-general of the Cyprus Bankers' Association, Michalis Cammas, to extend the moratorium. Kammas, for his part, reiterated the banks' willingness to continue to voluntarily refrain from foreclosures until the end of July 2025 - provided that buyers have acted in good faith in their transactions.
In recognition of your actions and efforts, we inform you that the members of the Cyprus Bankers' Association will grant an additional period of time and will not carry out any seizure or confiscation of property against distressed buyers until the end of July 2025,' the governor said.
At the same time, Kammas expressed concern about the lack of information received since the beginning of 2025, with the exception of the announcement of the completion of the working group and the referral of the new bill to the Parliamentary Legal Affairs Committee for further study. The Director General emphasised that the banking community expects to receive the final text of the Bill as soon as possible in order to study and comment on it. He also expressed the hope that the legislation will be finalised before the House of Representatives leaves for its summer recess in order to address the issue of stranded customers in a timely and effective manner.
It is worth noting that the Association of Distressed Loan Management and Mortgaged Property Companies (SEDP) has not yet joined the initiative, but recently announced its intention to resume auctions.
It should be recalled that the moratorium on the sale of mortgaged properties in Cyprus has been in force since 2020. This is why the Cypriot authorities have repeatedly received a signal to this effect from the European Central Bank (ECB) and the Commission.
The heads of these supervisory bodies are concerned about political interference in the sales law. According to the ECB, changes to the institutional framework for asset sales are not allowed. On the contrary, legislators should be careful to make changes that support banks' efforts to reduce NPLs rather than potentially increasing them.
However, supervisory reluctance is not limited to changes in the law in question, but also extends to the national banking supervisor's "tolerance" of continued suspensions of enforcement of the asset sale law. Thus, the first suspension of sales was granted for the period from March to June 2020, then it was extended until August, the next suspension covered the period from December to March 2021, the fourth moratorium was granted from April to July 2021, and so on ad infinitum.
It must be said that Cypriot financial institutions are awash with mortgaged properties that they cannot sell because of the constant postponements. And new extensions of the moratorium only increase their number. In addition, the country's credit rating is being downgraded and the government's cost of borrowing on the capital markets is increasing, as Cyprus' rating is already at the minimum investment level.