The volume of new loans in Cyprus fell by 22.8 per cent in February 2025, reaching €246.1 million, compared to €318.7 million in January.

According to a report released this week by the Central Bank of Cyprus (CBC), this marks the second consecutive month of significant decline in new lending.

The CBC attributed the drop primarily to a substantial decrease in large business loans, while the mortgage loan market exhibited a slight improvement.

Total new loans, including renegotiations, amounted to €431.8 million, down from €544.4 million in the previous month.

Consumer loans declined to €21.2 million, with net new loans at €19.3 million, compared to €26.5 million and €25.2 million respectively in January.

Housing loans increased to €152.1 million, with net new loans at €92.8 million, up from €132.6 million and €87.6 million in January.

Loans to non-financial corporations of up to €1 million stood at €55.8 million, with net new loans at €42.0 million, rising from €53.2 million and €38.2 million in the previous month.

In contrast, loans to non-financial corporations exceeding €1 million experienced a significant drop to €188.1 million, with net new loans at €92.0 million, down from €317.4 million and €167.7 million in January.

Interest rates rise for households, decline for businesses

According to the CBC, the interest rate on consumer loans rose to 7.11 per cent in February, up from 6.25 per cent in January.

The interest rate on housing loans also increased, reaching 4.56 per cent compared to 4.47 per cent in the previous month.

The CBC clarified that this rise is primarily due to changes in loan amounts rather than increases imposed by individual Monetary Financial Institutions (MFIs).

The CBC further explained that the mortgage loan portfolio of MFIs includes various types of loans, such as those for primary residences or holiday homes, each carrying different risk levels and corresponding interest rates.

As the composition of this portfolio changes monthly, the weighted average interest rate fluctuates independently of any adjustments made by financial institutions.

Meanwhile, the interest rate for loans to non-financial corporations for amounts up to €1 million dropped to 4.66 per cent from 5.08 per cent in the previous month.

Similarly, the interest rate for loans exceeding €1 million decreased to 4.48 per cent from 4.90 per cent.

Deposit interest rates show mixed trends

What is more, the CBC also reported contrasting trends in deposit interest rates.

The interest rate for household term deposits of up to one year increased to 1.51 per cent from 1.34 per cent in the previous month.

Conversely, the interest rate for deposits from non-financial corporations declined to 1.54 per cent from 1.80 per cent.