Interest rates on outstanding deposits in Cyprus stand at the lower level within Eurozone, while the interest rate level on new loans in Cyprus is comparable to the Eurozone median, the Central Bank of Cyprus notes, releasing the statistics on the average interest rates applied by monetary financial institutions (MFIs) in Cyprus on deposits and loans of euro area residents in euro for March 2026.
According to the CBC, this might be attributed to the excess liquidity of credit institutions in Cyprus, which is among the higher ones within Eurozone. Indicatively, the Liquidity Coverage Ratio – LCR in Cyprus in March 2026 stood at 315%, compared with 186% (median) and 163% (mean) in European Union in December 2025 (latest available data), as well as to the short range of the banking sector in Cyprus.
Deposit Rates
The interest rate on deposits from households with an agreed maturity of up to one year recorded a marginal decrease to 1.18%, compared with 1.19% in the previous month.
The corresponding interest rate on deposits from non-financial corporations registered an increase to 1.39%, compared with 1.19% in the previous month.
Lending Rates
The interest rate on consumer credit decreased to 6.79%, compared with 7.12% in the previous month.
The interest rate on loans for house purchase increased to 3.86%, compared with 3.45% in the previous month. It is noted that, the portfolio of loans for house purchase of the MFIs contains various types of loans, such as loans for primary residence, for vacation houses etc, which bear different risk and interest rate.
The composition of the housing loans portfolio varies from month to month, resulting in changes to the level of the weighted average interest rate, independently of the increases or decreases of the interest rates of the MFIs.
The interest rate on loans to non-financial corporations for amounts up to €1 million increased to 4.40%, compared with 4.22% in the previous month. The interest rate on loans to non-financial corporations for amounts over €1 million registered a decrease to 4.10%, compared with 4.15% in the previous month.
Amounts of pure new loans
Pure new loans recorded an increase to €495.3 million in March 2026 (from total of €730.4 million), compared with €328.7 million (from total of €435.1 million) in the previous month.
According to CBC, pure new loans for consumption increased to €24.6 million (from total of €26 million), compared with €20.1 million in the previous month (from total of €21.1 million).
Pure new loans for house purchase recorded an increase to €142.8 million (from total of €189.1 million), compared with €115.1 million in the previous month (from total of €151.6 million).
Pure new loans to non-financial corporations for amounts up to €1 million increased to €54.7 million (from total of €72.5 million), compared with €47.5 million in the previous month (from total of €60.4 million).
Pure new loans to non-financial corporations for amounts over €1 million registered an increase to €266.9 million (from total of €436.3 million), compared with €137.3 million in the previous month (from total of €191.6 million).
CBC notes that the interest rate level on outstanding loans in Cyprus is close to the respective Eurozone median, with the spread standing at zero (0.0%) for households and to 0.4% for non-financial corporations.
The correlation between the transmission rates of monetary easing and monetary tightening in Cyprus, is in line with the other Eurozone countries in outstanding loans, both to households and non-financial corporations.
More specifically, the correlation between the decrease observed in loans interest rates during the monetary easing period (i.e. for the period June 2024 – March 2026), with the respective increase during the monetary tightening period (i.e. for the period June 2022 – December 2023), is favourably compared with the other Eurozone countries.
The interest rate level on new loans in Cyprus is comparable to the Eurozone median. More specifically, the spread between the weighted average interest rate on loans to households for house purchase stands at -0.2% (lower than the Eurozone median), while the respective spread for non-financial corporations stands at 0.4%.
The correlation between the pass – through of the transmission rates of monetary easing and monetary tightening in Cyprus, is in line with the other Eurozone countries in new loans to households for house purchase. In relation to new loans to non-financial corporations, the pass – through in Cyprus appears to be weaker, both during the monetary tightening period (increase of interest rates) and the monetary easing period (decrease of interest rates).
However, it is it is observed that the average pass – through rate in Eurozone during the monetary tightening period (increase of interest rates) was higher than the respective pass – through rate during the monetary easing period (decrease of interest rates) in loans to households for house purchase and loans to non-financial corporations, by 28.3% and 15.5% respectively. The pass – through rate for households in Cyprus during the monetary tightening period was by only 4% higher than the respective pass – through rate during the monetary easing period, while for non-financial corporations it was by 6.1% lower.
In contrast to the loans interest rates, interest rates on outstanding deposits in Cyprus are considered as outlier, standing at the lower level within Eurozone.
This might be attributed to the excess liquidity of credit institutions in Cyprus, which is among the higher ones within Eurozone.
Indicatively, the Liquidity Coverage Ratio – LCR in Cyprus in March 2026 stood at 315%, compared with 186% (median) and 163% (mean) in European Union in December 2025 (latest available data), as well as to the short range of the banking sector in Cyprus.
The interest rates on new deposits in Cyprus are standing at similar levels with interest rates on outstanding deposits, due to the same reasons mentioned above.
The pass – through of increases and decreases of interest rates in deposits in Cyprus appears to be weak as compared with almost all other Eurozone countries, both for households and non-financial corporations. It is observed that the average pass – through rate in Eurozone during the monetary tightening period (increase of interest rates) was lower than during the monetary easing period (decrease of interest rates) in the new deposits portfolio of households and non-financial corporations, by 0.6% and 5.6% respectively. The respective differences between the pass – through rates are higher in Cyprus and they stand at 6,6% and 6,8% for households and non-financial corporations respectively.
According to CBC, the share of new loans tο households for house purchase with variable interest rate is aligned with the Eurozone. The said share follows a sharply declining trend in recent years. From almost 100% at the beginning of 2022, it has fallen to 12.2% in March 2026 and is close to the Eurozone median. This may be partly affected by the choice of fixed-rate lending in the early years (e.g. 3-5 years), and their subsequent conversion to a floating rate.
Consequently, there is a change in the behaviour of borrowers regarding interest rate risk, an element that should be taken into account in banks' risk management policies.
The share of new loans to households and non-financial corporations with floating interest rate compares favourably with the Eurozone. The said share follows a declining trend in recent years. From almost 100% at the beginning of 2022, it has fallen to 61.5% today, which is lower than the Eurozone median. This may be partly affected by the same reason mentioned above and should be taken into account in banks' risk management policies.
(Source: CNA)
