Nicosia: Interest rates on outstanding deposits in Cyprus are reported to be among the lowest within the Eurozone, while new loan interest rates in Cyprus are comparable to the Eurozone median, as noted by the Cyprus Central Bank (CBC) in its recent release of statistics on average interest rates applied by monetary financial institutions (MFIs) in Cyprus for March 2026.
According to Cyprus News Agency, the low deposit rates could be attributed to the excess liquidity of credit institutions in Cyprus, which ranks among the highest in the Eurozone. The Liquidity Coverage Ratio (LCR) in Cyprus for March 2026 was 315%, compared to the European Union's median of 186% and mean of 163% as of December 2025. Additionally, the short range of the banking sector in Cyprus plays a role in these figures.
The interest rate on household deposits with an agreed maturity of up to one year saw a minor decrease to 1.18% from 1.19% the previous month. Meanwhile, deposits from non-financial corporations experienced an increase in interest rates to 1.39%, up from 1.19%.
In terms of lending rates, the interest rate on consumer credit dropped to 6.79% from 7.12%. House purchase loan interest rates rose to 3.86% from 3.45%, reflecting the variety of loan types within the portfolio, which affects the weighted average interest rate. Loans to non-financial corporations for amounts up to £1 million increased to 4.40%, while loans over £1 million saw a decrease to 4.10% from 4.15%.
The volume of pure new loans also showed an upward trend, reaching £495.3 million in March 2026, a significant increase from £328.7 million the previous month. Pure new loans for consumption rose to £24.6 million from £20.1 million, while loans for house purchases increased to £142.8 million from £115.1 million. Loans to non-financial corporations for amounts up to £1 million rose to £54.7 million, and those over £1 million surged to £266.9 million from £137.3 million.
The CBC highlights that the interest rate levels on new loans in Cyprus are close to the Eurozone median, with a zero spread for households and a 0.4% spread for non-financial corporations. The pass-through rates of monetary policy changes in Cyprus align with those observed in other Eurozone countries, although they are weaker in new loans to non-financial corporations.
Cyprus's deposit interest rates are considered outliers due to their lower levels compared to the Eurozone, which is again linked to the high liquidity of credit institutions. The weak pass-through of interest rate changes in deposits is more pronounced in Cyprus than in most Eurozone countries, impacting both households and non-financial corporations.
Furthermore, the share of new loans to households for house purchases with variable interest rates has decreased significantly, aligning with the Eurozone median. This trend reflects a shift in borrower behavior towards interest rate risk, which banks need to consider in their risk management strategies. Similarly, the share of floating interest rate loans to households and non-financial corporations has declined, now lower than the Eurozone median, indicating a preference for fixed-rate options.