Cyprus sees record increase in deposit rates

In June, the interest rates on deposits in the Cypriot banking system experienced the largest monthly increase since the European Central Bank (ECB) began its efforts to raise key interest rates to combat inflation.

According to a report released this week by the Central Bank of Cyprus (CBC), the interest rate for deposits from non-financial corporations rose by 67 basis points in June, reaching 1.86 per cent compared to 1.19 per cent the previous month.

Similarly, the interest rate for household deposits with a maturity of up to one year saw a slightly smaller increase of 42 basis points, rising to 1.21 per cent from 0.79 per cent in May.

However, deposit rates in Cyprus remain significantly lower than the Eurozone average, positioning them among the lowest in the EU’s banking institutions.

In terms of loan interest rates, the rate for consumer loans witnessed an increase to 5.23 per cent compared to 4.97 per cent in the previous month.

Conversely, the interest rate for home loans marginally decreased to 4.19 per cent from 4.21 per cent in the previous month.

According to the Central Bank’s report, the interest rate for loans to non-financial corporations for amounts up to €1 million experienced a decline to 5.17 per cent, when compared to 5.37 per cent in the previous month.

Furthermore, a notable decrease was observed in the interest rate for loans to non-financial corporations for amounts over €1 million, which dropped to 5.87 per cent from 6.35 per cent in the previous month.

It is important to note that the interest rates mentioned above apply to new loans and not existing balances.

These developments in deposit and loan rates come amidst the European Central Bank’s ongoing efforts to manage inflation and stabilise the economy.