Newsroom
If you're taking out a mortgage in Cyprus today, chances are you're choosing a fixed interest rate rather than gambling on where borrowing costs might go next.
According to a new report by the Central Bank of Cyprus (CBC), fixed-rate home loans have become the preferred choice for new borrowers, marking a major shift in the way Cypriots finance one of the biggest purchases of their lives.
The change follows several years of interest rate turbulence, as the European Central Bank (ECB) first raised rates sharply to tackle inflation before gradually beginning to cut them again.
For many households, that uncertainty made one thing more valuable than anything else: knowing exactly what the monthly mortgage payment would be.
The Central Bank says that while most new mortgages before 2022 carried variable interest rates or fixed rates lasting less than a year, today's market is dominated by loans with fixed interest rates for between one and five years.
A similar trend has also emerged in business lending, although it has been less pronounced. At the same time, banks are offering more loans with fixed rates lasting longer than five years.
According to the CBC, the shift has been driven by two factors: borrowers wanting greater certainty over their monthly repayments and banks expanding their range of fixed-rate products with more competitive pricing.
For homeowners, that means less exposure to sudden increases in interest rates if borrowing costs rise again in the future.
The report also suggests Cyprus has become more competitive compared with the rest of the eurozone.
Since May 2025, interest rates on new home loans in Cyprus have actually been lower than the eurozone median, while borrowing costs for businesses have also moved much closer to European levels, although they remain slightly higher because of the nature of business lending.
Another positive trend is that the gap between what banks charge for loans and what they pay savers on deposits has narrowed significantly.
According to the Central Bank, the difference between Cyprus and the eurozone has shrunk dramatically over the past two years, largely because lending conditions have improved while Cyprus' banking system continues to hold high levels of customer deposits.
The CBC says the growing popularity of longer-term fixed-rate loans also changes how ECB decisions affect the economy. Instead of borrowers immediately feeling every rise or fall in interest rates, the impact is spread over a longer period, making household finances more predictable.
