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Cypriot banks made it harder for businesses to get loans in the second quarter of 2024, while lending rules for households stayed the same, according to a new survey by the Central Bank of Cyprus (CBC).
The survey shows banks are being more cautious about business loans due to reduced risk tolerance, though the demand for business loans remained stable. Meanwhile, households saw no changes in mortgage or consumer loan requirements, even as demand for these loans continued to drop, driven by high interest rates.
Banks are also rejecting more loan applications. The rejection rate for business loans increased for all types of businesses, reflecting tighter lending rules.
Despite hopes for looser rules, banks further tightened lending criteria for businesses. This comes as banks become more careful with risk. On the other hand, lending conditions for households stayed stable, with no changes in mortgage or consumer loan terms.
While business loan terms leveled out after seven quarters of being stricter, mortgage loans for households actually became a bit easier to get, with lower interest rates. However, terms for consumer loans remained unchanged.
Demand for household loans, especially mortgages and consumer credit, dropped again, as high interest rates and low consumer confidence discouraged borrowers. Business loan demand stayed steady, with companies needing more funds for investments and working capital.
Banks are also rejecting more loan applications. The rejection rate for business loans increased for all types of businesses, reflecting tighter lending rules. Similarly, more households saw their mortgage and consumer loan applications turned down.
Looking forward, the CBC expects loan rules to remain steady in the next quarter, though demand for consumer loans from households may continue to decline.
[With info from CNA]
