Over the past year, the demand for mortgages in Cyprus has grown significantly, exceeding the pre-pandemic level.
According to the latest Central Bank data published on Friday, November 2, the volume of new mortgage loans for the first nine months of 2021 reached 793.2 million euros compared to 518.2 million euros for the same period in 2020, and from 669.1 million euros for the same period in 2019.
The Central Bank of Cyprus also noted that the net demand for mortgages from households increased significantly in the second quarter of 2021 compared to the previous quarter. According to the country's main financial institution, this is due to favorable interest rates on loans to the population.
In addition, another factor contributing to the increase in demand for mortgages was the government subsidizing part of the interest rate on new mortgages.
As you may know, the main goal of this project was to support households in obtaining loans for the purchase of housing in the form of an interest rate subsidy, as part of the COVID-19 outbreak.
The government program for subsidizing mortgage interest payments started in Cyprus in the summer of 2020.
The government plan applied to loans taken from March 1 to December 31, 2020. However, due to the unprecedented popularity of the local population, in November 2020, the government of Cyprus announced its extension until December 31, 2021.
It should be noted that the main conditions for obtaining a state subsidy are that the housing loan should not exceed 400 thousand euros, the mortgage rate should be less than 2.3%, and the mortgage should be issued after March 1, 2020. The subsidy is issued for 4 years and covers up to 1.5% of the mortgage rate.
Local banks are currently promoting mortgage loans against the background of an improving financial environment and the need to increase their income base. In many cases, banks offer borrowers a deferred payment for several years.
According to the Central Bank, in September 2021, the interest rate on housing loans increased to 2.20% compared to 2.17% in the previous month and 2.12% in September 2020.
Cooperation with a bank in Cyprus is a great opportunity to take out a mortgage as profitably as possible. Moreover, it is often possible to buy a house in Cyprus on credit is much more practical than renting a property.