In May 2026, banks in Cyprus slightly increased deposit interest rates for both individuals and businesses. According to new data published by the European Central Bank, although the trend is positive, deposit returns on the island remain among the lowest in the eurozone.
Experts note that following a series of changes to the ECB's monetary policy, banks have gradually begun adjusting their deposit rates, but are doing so much more slowly than financial institutions in many other European countries.
How Much Can You Now Earn on Bank Deposits?
The average interest rate on household fixed-term deposits with maturities of up to one year increased to 1.25% in May. By comparison, it stood at 1.20% a month earlier and 1.16% in May 2025.
Despite the increase, Cyprus still ranks third from the bottom among eurozone countries in terms of deposit returns. Only Slovenia, with an average rate of 0.72%, and Greece, at 1.14%, offer lower returns. The most attractive rates for savers are currently available in the Netherlands, where the average deposit rate has reached 2.47%, and Finland, with 2.43%.
A modest increase was also recorded for deposits held by non-financial corporations. The average rate rose to 1.26%, compared with 1.22% a month earlier and 1.20% in May last year. Even after this increase, however, Cypriot businesses continue to receive the lowest returns on bank deposits in the eurozone. By comparison, similar deposits earn an average of 2.25% in France and 2.09% in Italy.
Experts attribute this situation to the high liquidity of Cyprus' banking system. Banks currently hold substantial volumes of excess funds and therefore have little need to attract additional deposits by offering higher interest rates.
Borrowing in Cyprus Remains Relatively Affordable
While depositors continue to receive relatively modest returns, borrowing conditions remain more favourable. The average interest rate on new residential mortgage loans increased slightly to 3.22% in May, up from 3.18% the previous month. Despite this modest rise, mortgage rates in Cyprus remain below the eurozone average, which increased to 3.45% from 3.43% in April.
Interest rates on consumer loans also remain below the European average. In addition, Cyprus continues to maintain one of the most competitive corporate lending markets. According to the European Central Bank, the country ranks among the ten EU member states with the lowest business lending rates.
Financial analysts believe that future interest rate movements will largely depend on decisions made by the European Central Bank. Throughout 2025 and 2026, the ECB has gradually eased monetary policy following the period of elevated inflation, a shift that has already begun affecting both borrowing costs and deposit returns across Europe.
Cypriot banks are expected to continue adjusting their interest rates cautiously, although experts do not anticipate a significant increase in deposit returns over the coming months. At the same time, relatively affordable mortgage and business lending conditions are likely to continue supporting strong demand for real estate and investment activity across Cyprus.