Cyprus’s 2026 state budget provides for a €12.5 million reduction in funding for programs that subsidize interest rates on new mortgage and business loans.
The decision reflects the completion of the active phase of government schemes that operated in 2022–2023, as well as a gradual decline in new applications.
According to Cyprus’s Accountant General, Andreas Antoniades, the funding needs for interest rate subsidy programs will decrease by €4 million for new mortgage loans and €8.5 million for entrepreneurial loans.
However, the government will continue supporting the most socially significant schemes, particularly the HOME program.
HOME Program: Helping Citizens Repay Their Loans
The HOME program remains one of the key government support mechanisms for citizens facing financial difficulties with their mortgage obligations.
Under this scheme, the state has allocated €7 million for 2026.
The main goal of the program is to allow primary borrowers to restructure their debts and keep their homes, which serve as collateral for their loans.
The scheme involves partial state participation in debt repayment and the creation of flexible restructuring conditions in cooperation with banks.
Essentially, HOME helps low- and middle-income families avoid losing their only residence, with the state covering part of their obligations provided that the borrower complies with the terms of the agreement.
Interest Rate Subsidies: A Boost for Affordable Housing and Business
Despite the overall reduction in spending, the budget still includes funds for programs subsidizing interest rates on new mortgage and business loans issued between January 1, 2022, and December 31, 2023.
A total of €3.5 million has been allocated for these schemes, allowing citizens and entrepreneurs to benefit from an interest rate reduction of up to 2% for up to two years on loans of up to €400,000.
For small and medium-sized enterprises (SMEs), the government will reimburse up to 3.5% of the interest rate during the first two years, and up to 2% over the next two years.
For large companies, the maximum subsidy is 1.5%.
This system helps reduce borrowing costs, stimulate new housing construction, and support business development amid high market interest rates.
Balancing Fiscal Discipline and Social Support
Although the overall volume of loan subsidies is being reduced, the Cypriot government maintains its strategic priority — supporting families, small businesses, and mortgage borrowers.
Programs aimed at lowering interest rates and restructuring debt remain vital tools of social policy and housing market stabilization.
The Ministry of Interior and Ministry of Finance emphasize that in the coming years, the focus will be on efficiency and targeting, ensuring that assistance reaches those who truly need it.