Cyprus housing loan rates climb to 4.06 per cent

New housing loans in Cyprus recorded a significant increase in May 2026, while the average interest rate on new housing purchase loans stood at 4.06 per cent, according to the latest data from the Central Bank of Cyprus (CBC) on interest rates and new lending.

Specifically, total net new loans reached €361.90 million in May, up from €331.30 million in April, the CBC said.

The strongest increase was recorded in housing loans, which rose to €145.50m from €106.00m the previous month.

New consumer loans also increased, reaching €23.90m compared with €21.80m in April, while new loans to non-financial corporations of up to €1m rose sharply to €63.40m, from €39.40m.

By contrast, new business loans above €1m declined to €121.50m, down from €156.80m in the previous month.

In terms of pricing, the average interest rate on new housing loans increased to 4.06 per cent, from 3.73 per cent in April.

Consumer loan rates fell to 6.95 per cent, from 7.19 per cent, while interest rates on corporate loans of up to €1m rose slightly to 4.27 per cent, from 4.20 per cent.

For larger corporate loans above €1m, rates declined to 3.85 per cent, from 4.08 per cent.

Deposit rates also moved higher, with the interest rate on household time deposits of up to one year increasing to 1.25 per cent, from 1.20 per cent, while rates for non-financial corporations rose to 1.31 per cent, from 1.23 per cent.

The Central Bank analysis shows that loan interest rates in Cyprus remain broadly in line with euro area medians.

It found that interest rates on new housing loans are 0.2 percentage points below the euro area median, while rates on new corporate loans are 0.2 percentage points higher.

By contrast, deposit rates in Cyprus remain among the lowest in the euro area, a development the Central Bank attributes mainly to high liquidity in the Cypriot banking system.

On the transmission of European Central Bank (ECB) monetary policy decisions, the CBC said Cyprus is broadly aligned with other euro area countries in terms of existing loans.

For new housing loans, the pass-through of interest rate increases and decreases is also broadly comparable with the European average.

However, transmission to new corporate lending is weaker, both during periods of interest rate increases and reductions by the ECB.

Pass-through to new deposit rates also remains weaker in Cyprus compared with most euro area countries, which is reflected in the relatively low rates offered by Cypriot banks to savers.

What is more, the Central Bank also highlighted a notable shift in the structure of new housing loans, with the share of loans carrying variable rates or fixed-rate periods of up to one year falling sharply in recent years.

By May 2026, this share stood at 17.8 per cent, down from almost 100 per cent at the start of 2022, indicating a clear shift among borrowers towards loans with longer fixed-rate periods in the early years of repayment.