**Loan Demand Rises Across Businesses and Households in Cyprus**
In the first quarter of 2026, Cyprus experienced a notable increase in loan demand from both businesses and households, as reported by the Central Bank of Cyprus (CBC) in its latest bank lending survey. Despite the ongoing external uncertainties, the lending criteria for obtaining loans remained stable compared to the previous quarter, indicating a consistent approach from financial institutions.
The survey highlighted a marked rise in net demand for loans across all categories, with corporate entities seeking funding primarily for fixed investments. Households also showed increased interest in borrowing, particularly for housing loans, which reflects a growing consumer confidence in the economy. The demand for consumer loans has also risen, driven by heightened expenditure on durable goods.
While the lending criteria remained unchanged during this period, banks are anticipating a tightening of these standards in the second quarter of 2026. This expectation comes amid a backdrop of reduced risk tolerance among lenders, which has led to more rigorous terms and conditions for granting new loans. Specifically, the margin on higher-risk loans has increased, indicating a cautious approach by banks in assessing creditworthiness.
The CBC noted that the stability in lending criteria for household loans, which includes both housing and consumer credit, is likely linked to the positive trajectory of economic activity in Cyprus. This stability has allowed households to pursue loans without significant changes in the terms offered by banks.
The increase in demand for housing loans is particularly noteworthy, as it suggests a resilient housing market and a favorable outlook for household investments in property. The CBC attributed this trend to a combination of factors, including the ongoing adaptability of the Cypriot economy and the stability of the labor market, which has contributed to consumer confidence.
Overall, the findings from the CBC indicate that while banks may prepare for stricter lending criteria in the near future, the current demand for loans from both businesses and households is expected to remain stable. This reflects a broader confidence in the Cypriot economy, despite the challenges posed by external factors.
As the second quarter of 2026 approaches, stakeholders in the financial sector will be closely monitoring these trends to gauge the potential impact on economic growth and consumer behavior in Cyprus.