Net New Loans in Cyprus Fall in November 2025 Amid Shifts in Interest Rates, Central Bank Reports

Net new loans in Cyprus declined in November 2025, according to a report released this week by the Central Bank of Cyprus. Specifically, net new loans fell to €256.3 million from total new loans of €565.2 million, compared with €429.4 million from total new loans of €624.9 million in October 2025. The Central Bank’s report also included statistical data on average interest rates applied by monetary financial institutions in Cyprus on deposits and loans to euro area residents in euros, alongside data on new lending volumes for the reference month. These figures were published in the Monetary and Financial Statistics release of December 2025, while comparative data for euro area countries are available through the European Central Bank Data Portal.

The Central Bank said the main developments in interest rates for new deposit and loan contracts, including renegotiated contracts, were analysed in detail. It reported that the interest rate on household time deposits up to one year increased to 1.13 per cent in November, compared with 1.07 per cent in the previous month. In contrast, the corresponding rate on deposits from non-financial corporations declined to 1.17 per cent from 1.23 per cent. The interest rate on consumer loans rose to 6.95 per cent, up from 6.88 per cent in October, while the rate on loans for house purchases increased to 3.86 per cent from 3.73 per cent.

The Central Bank explained that the mortgage loan portfolio of monetary financial institutions consists of various types of housing loans, such as loans for a primary residence or a holiday home, which carry different risk profiles and interest rates. “The composition of this portfolio changes from month to month, meaning the weighted average interest rate is affected by these shifts regardless of increases or decreases in banks’ lending rates,” it said. Interest rates on loans to non-financial corporations of up to €1 million remained unchanged at 4.39 per cent compared with the previous month, while rates for loans exceeding €1 million rose sharply to 4.50 per cent from 3.69 per cent, due to the predominance of higher-risk loans.

The Central Bank detailed net new lending figures across categories, noting that net new consumer loans declined to €20.4 million from total new loans of €23.4 million, compared with €23.7 million from total new loans of €25.1 million in October. Net new housing loans dropped to €113.4 million from total new loans of €155.7 million, compared with €117.5 million from total new loans of €158.7 million a month earlier. Lending to non-financial corporations of up to €1 million decreased to €48.3 million from total new loans of €59.6 million, compared with €50.8 million from total new loans of €68.3 million in October. Net new loans to non-financial corporations exceeding €1 million fell sharply to €69.6 million from total new loans of €320.8 million, down from €232.0 million from total new loans of €359.6 million in the previous month.

According to the Central Bank, interest rates on outstanding loan balances in Cyprus are close to the euro area median, with the margin at 0.0 per cent for households and narrowing to 0.4 per cent for non-financial corporations. Interest rates on new loans in Cyprus are also comparable with the euro area median. “Specifically, the margin of the weighted average interest rate for new housing loans to households stood at minus 0.4 per cent, meaning it was lower than the euro area median. For non-financial corporations, the corresponding margin for new loans reached 0.8 per cent,” the report said.

In contrast, deposit interest rates in Cyprus remain an outlier, standing at the lowest level in the euro area. The Central Bank attributed this to the high liquidity of Cypriot banks, which ranks among the highest in the euro area. By way of illustration, the Liquidity Coverage Ratio in Cyprus stood at 319 per cent in November 2025, compared with a median of 191 per cent and an average of 161 per cent in the European Union in September 2025. The Central Bank also cited the small scale of Cyprus’ banking market as a factor influencing deposit rates. It concluded that, similar to existing deposits, interest rates on new deposits also remain at the lowest level in the euro area for the same reasons.

By fLEXI tEAM