In Cyprus, in January 2026, mixed changes in interest rates on deposits and loans were recorded. According to the latest data published by the Central Bank, some categories show rising rates, while others show declines. At the same time, loan rates in the country are close to the median level of the Eurozone, whereas deposit yields continue to remain at minimal levels in the pan-European context.
Experts note that such a picture reflects the overall condition of the Cypriot banking system, where high liquidity is combined with moderate demand for borrowed funds and limited competition in the deposit market.
Growth of rates on fixed-term deposits
In the segment of term deposits with a maturity of up to one year for households, January 2026 saw a moderate increase in returns. The interest rate rose to 1.2% compared with 1.13% a month earlier. A similar trend was recorded for deposits of non-financial companies, where the rate increased to 1.27% from the previous level of 1.17%.
Despite the increase, deposit rates in Cyprus remain the lowest in the Eurozone both for existing balances and for new placements. This is largely due to excess liquidity in the banking system, which is considered one of the highest in the euro area, as well as the relatively small scale of the Cypriot banking market.
Consumer loans become more expensive, mortgages become cheaper
Changes in the lending segment turned out to be uneven. The interest rate on consumer loans in January 2026 rose to 7.22%, whereas in the previous month it stood at 6.95%. The increase in borrowing costs in this segment reflects higher risks and a cautious policy of banks regarding unsecured loans.
At the same time, mortgage loans showed the opposite dynamics. The rate on loans for home purchases decreased to 3.78% from 3.86%. The Central Bank emphasizes that the mortgage portfolio of monetary financial institutions includes different types of loans with varying levels of risk and interest rates. Monthly changes in the portfolio structure affect the weighted average rate regardless of the overall direction of interest rate policy.
Rate reductions for business
Positive dynamics for borrowers are also observed in the segment of lending to non-financial companies. For loans up to 1 million euros, the interest rate decreased to 4.32% from 4.39%, and for loans above 1 million euros — to 4.42% compared with 4.5% a month earlier. This indicates banks’ efforts to support the corporate sector amid slowing economic activity and rising financing costs in previous periods.
Cyprus compared to the Eurozone
In the broader European context, interest rates on existing loans in Cyprus practically coincide with the median level of the Eurozone. For households the difference is 0%, and for non-financial companies — only 0.3%. A similar situation is observed for new loans: the weighted average rate on new mortgage loans for the population in Cyprus is 0.3% lower than the Eurozone median, and for new business loans the difference reaches 0.6%.
Against this background, deposit rates in Cypriot banks appear abnormally low by European standards. Specialists attribute this to high bank liquidity, which reduces the need to attract depositor funds, as well as to the specifics and limited competition of the domestic financial market.
Overall, the Central Bank of Cyprus data for January 2026 show that the cost of loans in the country follows pan-European trends, while deposit yields remain restrained, reflecting the structural features of the Cypriot banking system.