Bank of Cyprus and Hellenic Bank on Friday announced a new raft of measures aimed at supporting vulnerable borrowers.

The developments come after meetings at the presidential palace earlier in the week between the CEOs of the banks with President Nikos Christodoulides.

After months of punishing interest rates on loans, both banks announced measures aimed at reducing the blow on borrowers.

Both banks said they were offering reduced interest rates for individuals who obtained a housing loan linked to a government scheme for young people (up to the age of 41) or property purchases in mountainous / disadvantaged areas.

Where Bank of Cyprus is concerned, it announced a 1% subsidy for interest rates linked to housing loans purchased benefiting from either of the government subsidies. The measures will take effect on January 10, 2025, unless stated otherwise.

The loan must have a three-year fixed interest rate. For loans with a 3.6% interest rate and a deposit exceeding 30%, the rate will be reduced to 2.6%.

In cases where the deposit is less than 30%, the interest rate will drop from 3.65% to 2.65%.

After the three-year fixed term, the interest rates will revert to the terms specified in the original loan agreements.

Hellenic Bank reiterated its announcement from earlier this week for first-time home buyers allowing them to secure a fixed interest rate of 2.95% for the first three years or 3.10% for the first five years.

For loans purchased where borrowers benefited from government schemes, individuals can benefit from an additional 0.45% reduction.

This translates to 2.5% for three years. All of its measures will be ready for full implementation by January 31, 2025.

Cost-cutting

Hellenic Bank said individuals who receive guaranteed minimum income (GMI) will be able to maintain a basic account without administrative fees. Pensioners will be allowed free cheque books.

Bank of Cyprus stipulated it that customers over the age of 65 can receive a free chequebook and maintain a savings account without administrative fees. Young people aged 18 to 25 can benefit from the new “Quick Account” product, which offers no administrative fees, a free debit card, free cash withdrawals from ATMs across Europe, free foreign currency withdrawals from international ATMs, and no foreign exchange fees for card use abroad.

Meanwhile, Hellenic Bank said it would be rolling out new ATM machines in high-demand spots. Free withdrawals and cash deposits at the bank’s cash desks are also available for pensioners, as well as free transfers within Cyprus and Europe (SEPA transfers) for amounts up to €3,000 and same day execution, also free of charge, through Online Banking and the Mobile App.

The bank also presents free account maintenance for young people between the age of 18 to 25 with a free debit card, free cash withdrawals in Euros from any ATM worldwide, free travel insurance, participation in the “MPLE” card rewards program, no foreign currency conversion fees (up to €300 per month) and with an option for an overdraft limit of up to €1,200.

Business loans

Hellenic Bank stipulated the low base rate for existing and new variable rate loans, which are linked to the bank’s Base Rate, is currently at 1.91%. It said it expects the downward trend in interest rates will continue, which is expected to result in further reductions in 2025.

Bank of Cyprus added it has allocated €100 million for loans to first-time homebuyers purchasing properties worth up to €350,000. These loans will carry a fixed interest rate of 2.85% to 2.9% for three years, depending on the deposit amount.

Additionally, the bank will offer 5,000 business loans of up to €5,000 each at a fixed 3% interest rate for five years. These loans aim to support energy or digital upgrades for small businesses.