In 2025, Cyprus’s banking system noticeably accelerated the process of revising terms on existing loans. Against the backdrop of a higher cost of living, elevated mortgage rates in previous years, and cautious bank lending policy, more and more borrowers began seeking to renegotiate their obligations. From January to November, the total volume of restructurings on household loans reached €716.1 million, whereas in 2024 this figure stood at €502.4 million. This means that restructuring in Cyprus is gradually becoming a standard financial tool rather than a last resort.
Mortgages became the main driver of growth
The main contribution to the growth in restructured loans came from mortgages. Their renegotiation in 2025 exceeded €633.8 million, which is almost double the previous year’s figures. This trend is directly linked to the situation in Cyprus’s real estate market, where demand from foreigners has remained high in recent years, and housing prices and utility costs continue to rise. Many families faced higher monthly payments and were forced to negotiate with banks to extend repayment terms or temporarily reduce the burden.
At the same time, the volume of restructured consumer loans, on the contrary, declined, indicating a more cautious approach by banks to unsecured borrowing. The segment of other loans also decreased, confirming that in negotiations with borrowers, priority is given specifically to mortgages as a key social and economic factor.
Cypriot businesses are negotiating more actively with banks
Significant growth was also recorded in the corporate segment. In the first eleven months of 2025, the volume of restructured business loans reached €2.37 billion versus €1.82 billion a year earlier. The volume of large loans over one million euros grew especially quickly, showing that even medium-sized and large companies in Cyprus feel pressure from higher financing costs, rising rents, and slower demand in certain sectors, including construction and trade.
Small businesses are also increasingly resorting to renegotiating loan terms to maintain liquidity and avoid arrears. For many entrepreneurs, restructuring has become part of a survival strategy and adaptation to the new economic reality.
What this means for borrowers in 2026
At the beginning of 2026, Cyprus’s banks continue to expand programs to ease credit burdens. Temporary grace periods, extended repayment terms, and tailored schemes for families with variable income and for companies affected by rising energy and rental costs are being offered more often. Experts expect restructuring volumes to remain high, since inflationary pressure and housing costs are not yet falling quickly enough.
For individuals and businesses in Cyprus, this means that renegotiating loan terms is becoming not a sign of financial trouble, but a normal part of financial planning. Restructuring is increasingly seen as a tool to protect budgets, preserve property, and maintain business stability in a changing economy.
What is restructuring?
Recall that restructuring is a change to the terms of an existing loan. The loan agreement remains in force, and all issues are resolved within the organization that issued it. Moving to another bank is not possible. This program is aimed at improving the borrower’s financial situation when they have difficulties repaying the debt.
Restructuring is carried out in one of the following ways:
- the interest rate is reduced — the debtor will spend less each month on servicing the loan;
- the loan term is “stretched” — it increases, but the size of the monthly payments decreases;
- the borrower is granted payment holidays — for some time they can pay only the interest on the loan;
- it is possible to pay only the interest on the loan;
- accrued interest is written off.
Important: the loan terms do not become fundamentally better — for the debtor, this is only an opportunity to “get a breather,” prevent a difficult situation, and not damage relations with the lender. Banks agree to restructuring so as not to burden themselves with hopeless debt and to get their money without court enforcement and property confiscation.