Cyprus deposit rates drop while home loans become pricier

The average interest rate on new household deposits in Cyprus fell to 1.27 per cent in July 2026, while the average rate on new housing loans rose to 3.24 per cent, according to the Central Bank of Cyprus (CBC). Both rates remained below their respective euro area averages, with the average deposit rate in the euro area standing at 2.10 per cent and the corresponding rate for housing loans at 3.54 per cent. The CBC figures cover each credit institution operating in Cyprus, with July 2026 as the reference month. The average interest rate on new euro-denominated deposits from euro area-resident households fell from 1.42 per cent in June to 1.27 per cent in July. Among deposits with an agreed maturity of up to one year, the National Bank of Greece offered the highest rate to households in July at 1.62 per cent, down slightly from 1.64 per cent in June. Alpha Bank followed at 1.45 per cent, up from 1.39 per cent, while Eurobank and Societe Generale each offered 1.32 per cent. Eurobank’s rate had been 1.51 per cent in June, while Societe Generale’s had been 1.12 per cent. For companies, Ancoria Bank offered the highest rate on deposits in July at 1.94 per cent, up from 1.60 per cent in June. Alpha Bank followed with a rate of 1.66 per cent, compared with 2.05 per cent the previous month. The average interest rate on new euro-denominated housing loans to euro area-resident households, regardless of the initial rate-fixing period, increased to 3.24 per cent in July from 3.18 per cent in June. The rate applies to new business and new loan agreements, the CBC clarified. The euro area average was higher at 3.54 per cent, the report added. Societe Generale recorded the highest household housing-loan rate among the institutions listed in the CBC data at 3.55 per cent, although no comparable figure was available for June. The Bank of Cyprus followed at 3.37 per cent, up from 3.28 per cent, while the Housing Finance Corporation recorded 3.31 per cent, down from 3.36 per cent. The average interest rate on new loans to companies of up to €1 million, for euro area residents and regardless of the initial rate-fixing period, also increased. It stood at 4.51 per cent in July, compared with 4.16 per cent in June. Banque SBA recorded the highest rate at 6.99 per cent, followed by Societe Generale at 4.99 per cent and Ancoria Bank at 4.79 per cent. The latest figures come against a backdrop in which Cyprus has substantially reduced the burden of non-performing loans (NPLs) on bank balance sheets, although the wider private debt problem has not disappeared. In an analysis published by the CBC, Xenios Socratous of the central bank’s risk analysis section said Cyprus had undergone a dramatic transformation, moving from NPL levels approaching half of total lending to a banking system with asset-quality indicators broadly aligned with the EU average. “The problem of NPLs was never simply a banking ratio. It was a macroeconomic constraint,” Socratous stated. He explained that high levels of bad loans had tied up bank capital and restricted banks’ ability to finance the economy, while heavily indebted households and businesses tended to delay investment and consumption. The subsequent clean-up involved stronger provisioning, specialised arrears-management units, legal reforms, restructuring, debt-for-asset swaps and the sale of NPL portfolios, including the Bank of Cyprus’ Project Helix. Socratous stressed, however, that moving NPLs away from banks did not eliminate the underlying debt, with credit-acquiring companies now holding most problematic loans. He said borrowers continued to face outstanding obligations and restructuring or recovery procedures, while unresolved NPLs could still affect the property market. “Selling NPLs improves banks’ balance sheets, strengthens investor confidence and releases capital for new lending. The underlying credit risk, however, does not disappear. It is transferred to another creditor,” he said. The issue of household debt and housing security has also returned to the European banking debate. Cypriot MEP Michalis Hadjipantela has asked the Association of Cyprus Banks to strengthen protection for vulnerable borrowers who have already repaid a substantial part of their mortgages. His letter was also sent to the CBC and the European Central Bank (ECB) and followed provisions backed by the European Parliament calling for adequate protection of primary residences, particularly for vulnerable households.