Net demand for loans in the second quarter of 2025 was up both from enterprises and households, according to the Bank Lending Survey (BLS) of the Central Bank of Cyprus.
At the same time, according to banks’ expectations for the third quarter of 2025, a further increase in net demand is expected for housing loans, consumer credit and other loans from households.
Meanwhile, lending criteria for loans to enterprises and households remained unchanged. According to banks’ expectations for Q3 2025, lending criteria for businesses are expected to tighten, while those for households are expected to remain unchanged.
Specifically, according to the CBC Bank Lending Survey for Q2 2025, lending criteria for loans to enterprises and households, for both housing and consumer/other loans, remained unchanged in Q2 2025 compared to the previous quarter. The survey indicates that all factors related to lending criteria, across all categories, had a neutral impact during the quarter under review.
Regarding enterprises, these terms remained broadly stable, although the survey recorded a drop in interest rates for new business loans and in banks’ margins for standard new business loans, due to increased competition from other banks and the perception of lower risk given the general economic situation and prospects.
Regarding households, the CBC report says that the overall terms and conditions for granting new housing loans in Q2 2025 remained unchanged compared to the previous quarter, although, as with business loans, a reduction was recorded in lending interest rates and banks’ margins for standard new housing loans, due to competitive pressures.
Loan Demand
Regarding loan demand, the survey finds that net loan demand increased in Q2 2025, both from enterprises and households, for consumer credit and other loans, and to a greater extent, for housing loans.
“The net increase in demand for business loans is attributed by banks to the financing needs of enterprises, both for inventories and working capital and for fixed investments,” the report notes.
For households, the net increase in demand for housing loans is attributed to the general level of interest rates, increased consumer confidence, and improved housing market prospects.
Similarly, the increase in demand for consumer and other loans is, according to the survey, due to the general level of interest rates.
At the same time, net demand for loans from enterprises is expected to remain stable, while a further increase is expected in net demand for both housing loans and consumer credit, along with other loans from households.
(Source: CNA)
