Net new lending in Cyprus accelerated sharply in December, as borrowing activity strengthened at the end of the year while interest-rate movements diverged across loan categories, Central Bank of Cyprus (CBC) showed.

Net new loans rose by €368.7 million month-on-month to €625m, out of total new lending of €986.9m, compared with €256.3m out of €565.2m in November.

At the same time, deposit rates moved higher for both households and businesses.

Consumer-loan rates also increased, whereas housing-loan rates eased. Overall, the CBC said the level of interest rates on new loans in Cyprus remains broadly comparable with the eurozone median.

Looking more closely at lending volumes, consumer borrowing slowed. Net new consumer loans fell to €17.2m (from €18.2m in total new loans), compared with €20.4m the previous month (from €23.4m).

By contrast, housing finance strengthened. Net new loans for house purchase increased to €135.4m  (from €178.1m total new loans), up from €113.4m in November (from €155.7m).

Corporate borrowing also picked up. Loans to non-financial corporations of up to €1m rose to €60.3m (from €92.5m total new loans), compared with €48.3m previously (from €59.6m).

Meanwhile, larger corporate lending surged to €406.4m (from €685m total new loans), from €69.6m in November (from €320.8m).

Deposit remuneration edged higher during the month. The interest rate for household time deposits of up to one year increased to 1.2 per cent from 1.13 per cent, while the corresponding rate for non-financial corporations rose to 1.27 per cent from 1.17 per cent.

However, borrowing costs moved in different directions. The interest rate on consumer loans increased to 7.22 per cent from 6.95 per cent.

In contrast, the rate on housing loans declined to 3.78 per cent from 3.86 per cent.

The CBC noted that the housing-loan portfolio contains different types of loans, including first residences and holiday homes, carrying different risks and pricing.

As a result, the weighted average rate may change from month to month regardless of individual bank rate adjustments.

Corporate borrowing costs eased slightly. Rates for loans up to €1 million fell to 4.32 per cent from 4.39 per cent, while rates for loans above €1m declined to 4.42 per cent from 4.5 per cent.

In a broader European context, the CBC said interest rates on existing loan balances in Cyprus are close to the eurozone median, with a margin of 0.0 per cent for households and 0.3 per cent for non-financial corporations.

It added that interest rates on new loans are also comparable to the median. Specifically, the weighted average margin for new housing loans to households stands at -0.3 per cent, while for non-financial corporations it is 0.6 per cent.

However, deposit rates continue to diverge. The CBC said deposit interest rates in Cyprus remain the lowest in the eurozone.

“This may be due to the high liquidity of Cypriot banks, which is among the highest in the Eurozone, as well as the small scope of the Cyprus banking market,” it said, noting that the Liquidity Coverage Ratio stood at 319 per cent in December 2025, compared with a median of 191 per cent and an EU average of 161 per cent.

Finally, the central bank added that rates on new deposits are set at similar levels to existing deposits, reflecting the same factors.