Cypriot banks have lowered their key interest rates, with expectations of further reductions throughout 2025, in response to decisions made by the European Central Bank (ECB).

The director of retail banking at the Bank of Cyprus, Theodosios Theodosiou, stated in an interview with state radio that “the Bank of Cyprus, with a steady focus on the needs of society, immediately implemented all the measures announced on December 20, 2024”.

He explained that the bank had first moved to lower interest rates, promptly responding to the ECB’s decisions by reducing its reference rate for loans linked to the ECB’s base rate from 3.15 per cent to 2.90 per cent, effective from February 5, 2025.

As a result, he noted, 12,000 borrowers will see their monthly payments decrease from this month.

Moreover, Theodosiou clarified that this marks the fifth consecutive interest rate reduction over the past eight months, with a total decrease of 1.6 per cent since the ECB started cutting rates in June 2024, dropping from 4.50 per cent to 2.90 per cent.

Additionally, he mentioned that interest rates have also been lowered for another 8,000 borrowers with loans linked to the Euribor rate, which has decreased from 4.14 per cent in October 2023 to 2.59 per cent as of today.

Theodosiou expressed confidence that “there will be another 2-3 rate cuts within the year,” although he stressed that “the decisions rest with the ECB”.

He added that “the next meeting is in March, and all markets are expecting another reduction”.

Furthermore, Theodosiou confirmed Bank of Cyprus’s commitment to supporting households, mentioning that “the process of rewarding loyal borrowers is currently underway”.

As part of this initiative, around 13,000 members of the Pronomia programme have received messages to decide on their rewards.

Of these, 9,500 responded, with 80 per cent requesting cash as their reward, and 15 per cent opting for a bonus reward.

He also highlighted the implementation of a government plan to subsidise mortgage rates for young couples.

According to Theodosiou, the only outstanding measure is the installation of ATMs in remote mountainous areas.

Meanwhile, Andreas Assiotis, the Head of Retail Banking at Hellenic Bank, also spoke to state radio, assuring that “Hellenic Bank recognises the challenges facing society due to high inflation”, and has therefore taken an active role in supporting households.

“Hellenic Bank, with over 500,000 customers, is aligned with the government and has implemented specific measures,” he said.

Regarding the reduction in key interest rates from 3.15 per cent to 2.90 per cent, Assiotis noted that “6,000 borrowers have benefited.”

He also mentioned that another 90,000 borrowers, whose loans are linked to the bank’s base rate (which is lower than the ECB’s rate at 1.91 per cent), will see their rates decrease to 1.75 per cent from February 15.

In addition, Assiotis announced a new mortgage loan offering a fixed interest rate of 2.95 per cent for the first three years.

He provided an example, stating that for a €100,000 loan at the new rate, borrowers would pay around €400 to €450 per month for the first three years.

Assiotis further revealed that Hellenic Bank introduced a new rewards programme that offers cash directly to borrowers based on their loan amount.

For example, a €100,000 loan would entitle borrowers to receive €1,000 in cash, which they could use to purchase household-related products from specific merchants participating in the programme, with the maximum amount reaching up to €2,000.

Finally, he expressed the belief that interest rates would continue to fall as inflation stabilises.