New loan issuance increased in the first seven months of 2024, according to new data from the Central Bank (CBB), amid excess liquidity of more than €28 billion.
Despite high interest rates and general economic uncertainty, borrowers continue to take out new loans, while banks lend against their existing liquidity.
According to the central bank, new loans granted in the first seven months of 2024 totalled €2.064bn, compared to €2.001bn in the first seven months of 2023, an increase of 3.1 per cent. Compared to 2019, total loans in Cyprus increased by 3.7 per cent.
New loans to households increased by 5.4 per cent between January and July 2024, reaching €822 million compared to €780 million a year earlier. At the same time, they grew by 7.6 per cent year-on-year in 2019. New business loans increased by 1.7 per cent to €1.242 billion, compared with €1.221 billion in 2023. Compared to 2019, an increase of 1.3% was recorded.
According to experts, the increase in demand for credit is due to the following factors:
- An increase in real wages, which enabled people to borrow larger amounts than before;
- The lack of a wide range of financial instruments for investment and the need to invest funds;
- the variety of credit offered by banks;
- The relatively high growth rates of the Cypriot economy have contributed to the fact that residents are more likely to take on long-term debt in their personal budgets.