Fresh data from the Central Bank of Cyprus and the European Central Bank shows that the island nation ranks second-to-last in the EU in terms of deposit rates. In other words, Cypriot households receive the lowest returns on their savings. The situation is even worse for businesses — corporate deposits in Cyprus generate the lowest income in the entire EU.
To recap, in October the interest rate on household time deposits with a maturity of up to one year fell to 1.07%, down from 1.1% a month earlier. Only Slovenia has a lower rate, at 0.74%. Meanwhile, in Italy, the Netherlands, and Finland, depositors receive between 2.08% and 2.29%, while the Eurozone average stands at 1.77%.
Why Cypriot deposits are “losing value”
The Central Bank of Cyprus attributes this situation to the exceptionally high liquidity of local financial institutions and the relatively “narrow” domestic market.
For reference, in October 2025 the Liquidity Coverage Ratio (LCR) in Cyprus reached 329% — twice the EU average of around 162%. With such high liquidity, banks feel no pressure to attract additional funds and therefore have no need to raise deposit interest rates.
Rising lending rates: pressure on borrowers intensifies
While deposits generate almost no income, lending rates continue to rise. Consumer loan rates climbed to 6.88%, up from 6.46% the previous month.
The rate on housing loans increased to 3.73%. It is important to note that the mortgage portfolio includes various types of loans — from financing first homes to purchasing countryside properties. Due to changes in the portfolio structure, the average rate may fluctuate independently of market dynamics.
For companies, the picture is mixed:
- loans up to €1 million became more expensive, rising to 4.39%,
- while loans above this amount became cheaper, dropping to 3.69%.
For comparison within the Eurozone: consumer loans in Cyprus remain among the lowest in the EU, and mortgage rates are below the European average.
How Cyprus compares with the Eurozone
According to the Central Bank of Cyprus, the gap between Cypriot and average EU rates in the existing loan portfolio has nearly disappeared. For households, it stands at 0%, and for companies — around 0.4%.
For new loans, the situation is also close to the Eurozone average: the difference for household mortgages is –0.3% (i.e., lower than in the Eurozone), and for companies — only 0.1%.
Outlook for Cypriot depositors and borrowers
Financial analysts expect that deposit rates may begin to rise in 2026 if the European Central Bank adjusts its monetary policy and starts lowering key rates. However, the high liquidity of Cyprus's banking system means that any increase in deposit returns will be slow and moderate.
At the same time, demand for loans on the island remains stable thanks to growth in the real estate market, the tourism sector, and the increasing number of companies relocating their operations to Cyprus.