Newsroom
Cypriots who keep their savings in the bank are receiving very little in return, despite paying considerably higher interest when they need to borrow money.
According to the Central Bank of Cyprus, the average interest rate on new household deposits of up to one year rose from 1.25% in May to 1.42% in June.
Although this was an improvement, Cyprus remained near the bottom of the eurozone. The typical rate across the currency bloc was about 2%.
To put that into everyday terms, someone placing €10,000 in a one-year deposit at 1.42% would earn around €142 before tax. At a rate of 2%, the same savings would earn about €200.
The picture is even worse for money already held in fixed-term accounts. Existing household deposits in Cyprus earned an average of just 0.8%, the lowest rate shown in the Central Bank’s eurozone comparison.
Borrowing money is a different story.
The average interest rate on a consumer loan, the kind someone might take out for a car, home repairs, or an unexpected bill, was 6.5% in June.
The average rate on a new mortgage was 4.04%, while businesses paid 4.32% on loans of up to €1 million.
These are average rates, so the actual amount offered will depend on the bank, the customer, and the type of loan or savings account.
Still, the difference is clear: banks pay customers relatively little for holding their savings but charge them much more when they need to borrow.
The Central Bank says one possible reason is that Cyprus banks already have plenty of money available. Because they do not urgently need more deposits, they have less reason to offer savers better rates.
Competition may also be limited because Cyprus has a small banking market with relatively few major players.
At the same time, banks are lending more. Completely new loans reached €626.2 million in June, compared with €361.9 million in May. New home loans accounted for €152.1 million, while consumer loans reached €25.1 million.
For ordinary savers, the figures are a reminder to compare what different banks are offering instead of automatically renewing the same deposit.
Even a small difference in the interest rate can matter, particularly for people putting away larger amounts or locking up their money for several years.
The question many Cypriots may be asking is straightforward: if banks are holding so much of our money, why are they paying us so little for it?
