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Mortgage interest rates in Cyprus dipped slightly in February, offering some relief to prospective homeowners, but don't pop the champagne just yet. Despite the modest cuts, borrowing in Cyprus remains noticeably more expensive than in the rest of the Eurozone.
According to fresh figures from the Central Bank of Cyprus, all local banks reduced their mortgage interest rates for home loans with terms over five years. It’s a welcome move, especially for young couples and first-time buyers hoping to get on the property ladder. But when you compare Cyprus’ rates to the European average, the picture isn't quite as rosy.
Take this: the average mortgage rate in Cyprus is now 4.17%, whereas the Eurozone average sits at a much friendlier 2.43%. That’s a pretty steep gap, and for the average family, it means thousands more in interest over the life of a loan.
Leading the pack locally with the lowest rate is Societe Generale, offering 3.28%, followed closely by the Housing Finance Corporation at 3.31%. Most other banks hover well above 4%, with Bank of Cyprus topping the list at 4.54%.
On the flip side, deposit rates are still dragging behind. If you're hoping to make a little something off your savings, you might be disappointed. The average interest rate on household term deposits (for up to two years) in Cyprus is just 1.11%, compared to 2.44% in the Eurozone. So while borrowing costs more here, saving earns you less, a frustrating double whammy for Cypriot families and retirees.
The best deposit deal for households currently comes from Arab Jordan Investment Bank at 2.71%, while Hellenic Bank sits at the bottom with just 0.64%. For comparison, even the average European saver is doing better without having to shop around.
Businesses are also feeling the squeeze. While loan rates for companies have edged down slightly, they’re still well above the Eurozone norm. The average interest rate for long-term business loans in Cyprus is 4.92%, whereas across the EU it’s just 3.25%.
The National Bank of Greece offers the most competitive rate at 4.16%, but many other banks, including Cyprus Development Bank and Bank of Cyprus, charge north of 5%. And when it comes to term deposits for businesses, Cypriot institutions once again fall short, offering an average of 1.60% versus 2.76% in the Eurozone.
A system out of sync?
So, what does all this mean for the average Cypriot? In short: we’re paying more to borrow and getting less to save.
The gap between Cyprus and the rest of Europe has long been a point of frustration. Local economists point to the smaller size of the banking sector, limited competition, and higher perceived risks by lenders. But for everyday people trying to buy a home, grow a business, or build up some savings, those explanations offer little comfort.
With Easter around the corner and many families watching their budgets, these figures are a timely reminder that while the financial system may be slowly shifting in the right direction, there’s still a long road ahead to catch up with Europe.
