Newsroom
Banks in Cyprus raised the interest rates on home loans in August, while reducing the interest rates offered on household deposits, according to data released by the Central Bank of Cyprus on Wednesday. At the same time, the amount of new loans issued in August saw a sharp decline, dropping by nearly a third compared to July.
The average interest rate on household deposits with a maturity of up to one year fell to 1.79% in August, down from 1.96% the previous month. However, interest rates on deposits from non-financial corporations increased slightly to 2.33%, compared to 2.28% in July.
Total new loans issued by banks in August amounted to €395.5 million, significantly lower than the €596.3 million issued in July
When it comes to borrowing, the cost of consumer loans dropped slightly to 6.59%, down from 6.67% in the previous month. On the other hand, mortgage rates rose, with the average interest rate for home loans increasing to 4.65%, up from 4.59%.
For businesses, the interest rate on loans of up to €1 million decreased to 5.36%, compared to 5.61% in July. Similarly, loans over €1 million saw a dip in rates, falling to 5.42% from 5.64%.
Total new loans issued by banks in August amounted to €395.5 million, significantly lower than the €596.3 million issued in July, marking a considerable slowdown in borrowing activity.
New loans for personal consumption dropped to €20.6 million, down from €28 million in the previous month. New mortgages also saw a decline, falling to €95.6 million in August, compared to €134.3 million in July.
Businesses also reduced their borrowing, with loans of up to €1 million decreasing to €52.8 million in August, down from €75.5 million in July. Larger corporate loans, over €1 million, experienced the biggest drop, plunging to €179.3 million from €345.2 million in the previous month.
The increase in mortgage rates and the decline in new loans reflect the cautious approach of both lenders and borrowers amid uncertain economic conditions. While businesses and consumers are facing higher borrowing costs, the drop in demand for loans indicates that many may be holding off on large financial commitments for the time being.
[With info from CNA]
