In July 2025, Cyprus experienced a significant rise in interest rates on consumer loans, accompanied by a decline in mortgage rates. According to the Central Bank (CB), the average interest rate on consumer loans reached 7.4%, which is higher than the figure of 7.01% recorded in June. Meanwhile, the average rate on home loans fell from 3.95% to 3.87%.
While Cypriot rates remain close to the Eurozone median, they exceed it in most categories. This places an additional burden on borrowers, particularly given the ongoing increase in the cost of living and real estate prices.
Deposits: lower returns for individuals and higher returns for companies
Interest rates on term deposits of up to one year for households fell from 1.13% to 1.08% in July. For non-financial companies, however, there was an increase in yields — from 1.18% to 1.21%. Experts note that this difference is due to banks' different policies regarding corporate and retail deposits, as well as increased competition for business funds. International financial analysts predict that deposit rates may start to rise again in the coming months if the European Central Bank maintains high key rates to curb inflation.
Business loans: mixed changes
According to the CBR, loans to non-financial companies of up to 1 million euros have become cheaper, with the average rate falling from 4.39% to 4.29%. However, for large loans of over 1 million euros, the opposite is true — rates have risen from 4.04% to 4.29%.
This mixed dynamic reflects the different levels of credit risk and market conditions for small and large businesses. In recent months, small businesses have faced stricter loan approval conditions, but have benefited from lower borrowing costs.
Comparison with the Eurozone: Cyprus is above the median.
In July 2025, the average interest rate on existing loans to households in Cyprus was 4.05%, compared to 3.96% in the Eurozone. For businesses, the difference is even more pronounced: 4.31% in Cyprus versus 3.79% on average in Eurozone countries. Economists attribute this difference to less competition in the Cypriot banking market and a higher assessment of the credit risk posed by Cypriot borrowers.
New loans saw a sharp decline
The volume of net new loans decreased by €197.5 million to €445.3 million in July 2025, compared to €642.8 million the previous month. This decline was recorded in almost all categories, except for consumer loans which increased slightly to €24.9 million compared to €23.2 million in June.
Mortgage lending fell from €131.4 million to €125.1 million and loans to small and medium-sized businesses (up to €1 million) fell from €61.9 million to €57.3 million. Large corporate loans fell particularly sharply, from €420.6 million in June to €230.9 million in July.
Outlook for the Cypriot credit market
According to financial analysts' forecasts, the second half of 2025 may see a further decline in mortgage rates if the European Central Bank begins to gently lower its key rate. However, rates for consumer loans and the corporate sector are likely to remain at their current high level due to persistent inflation risks and the cautious policy of Cypriot banks.
Against this backdrop, individuals and businesses are advised to carefully consider their choice of credit products, comparing terms and conditions at different banks and taking into account not only nominal rates, but also additional fees.