On Thursday, April 23, the Parliament of Cyprus approved a package of laws that significantly changes the rules governing property foreclosures and mortgage debt regulation. These changes come in response to long-standing problems in the banking system and the growing number of non-performing loans.
The main goal of the reform is to speed up judicial procedures while strengthening the protection of borrowers. In recent years, mortgages have become one of the most sensitive issues for residents, especially amid economic pressure and rising interest rates in the eurozone.
How court procedures and debt management will change
One of the key innovations is the expansion of the powers of district courts. They will now be able to directly handle financial disputes related to debt and real estate without complex intermediate procedures. This is expected to shorten case processing times and reduce the burden on the judicial system.
An important limitation on interest accrual has also been introduced. If the total debt, including interest, reaches twice the original loan amount, it can no longer increase. This measure is designed to prevent situations where debt becomes unmanageable for borrowers.
New restrictions for banks and creditors
The new laws strengthen oversight of banks and companies managing debt. Credit institutions can no longer require additional collateral if the value of the already pledged property covers the outstanding debt. This restriction protects borrowers from excessive pressure and additional financial obligations.
Procedures for personal bankruptcy and debt restructuring have also been revised. A newly introduced 12-month period gives debtors additional time to find solutions, including negotiations with banks and attempts to retain their property. This represents an important step toward a more flexible and socially oriented approach to debt issues.
The scale of the non-performing loan problem
The debt situation in Cyprus remains tense. According to the Central Bank of Cyprus, by the end of 2025, debt management companies controlled obligations of more than 60,000 borrowers totaling over €19 billion. The vast majority of these loans are non-performing.
These companies already hold thousands of real estate assets with a total value of nearly €1 billion. For many families, the new legislative changes are directly linked to the possibility of keeping their homes and avoiding forced sales.
Why there was a conflict with the president
Despite the approval of the legislative package, not all proposals were supported. President Nikos Christodoulides had previously proposed additional measures to protect borrowers, including expanding their rights to challenge loan terms and debt amounts.
However, Parliament did not support one of the key initiatives related to the regulation of property transfers and collateral. This decision caused disagreements among politicians and intensified the debate over balancing citizen protection with financial system stability.
The adopted changes are expected to impact both the real estate market and the banking sector. On one hand, borrower protection will be strengthened and additional tools for resolving debt issues will be introduced. On the other hand, banks may tighten lending conditions to offset increased risks.
In 2026, mortgages remain one of the most discussed topics in the country. The reform is only beginning to be implemented, and its real consequences will become clear in the coming years. One thing is certain—the rules of the game in Cyprus’s real estate market are changing, and both borrowers and investors will need to adapt to the new conditions.