The Central Bank of Cyprus has released a new report, in which it analyzed the interest of local residents and companies to arrange loans.
It is worth noting that the conclusions of the main banking institution of the island state were made on the basis of data for the fourth quarter of 2023.
As it turned out, a decrease in net demand for new business loans was recorded in Cyprus. The Central Bank noted that this trend has continued since the first quarter of 2022, albeit to a lesser extent than originally expected. The main reason is the high level of interest rates on this category of loans. At the same time, in the fourth quarter of 2023, the net demand for housing loans in Cyprus remained unchanged, while the interest in capital investments increased.
In turn, according to the data of the Central Bank of Cyprus, the net decrease in the overall demand for loans seems to be due to a decrease in loans from SMEs, while for large enterprises the net demand for loans remained unchanged. With regard to mortgage lending, competitive interest rates in this category led to a stabilization of demand. Interest in consumer loans also declined.
According to the survey, during the fourth quarter, deteriorating consumer confidence, rising interest rates and further reductions in spending on durable goods contributed to a decline in demand for this loan category," the CBK said.
It should be noted that the approval criteria for loans to businesses remained unchanged in the fourth quarter of 2023, while there was a tightening of the rules for the two categories of loans to households due to credit risk prevention by participating banks.
However, the factor related to the creditworthiness of borrowers did not affect the loan approval criteria for households in this quarter, unlike in the previous quarter where it contributed to their tightening.