Cyprus’s credit market is experiencing one of its busiest years in more than a decade, even as deposit rates remain among the lowest in the euro area.

Fresh data from the Central Bank of Cyprus and the European Central Bank show diverging trends in July 2025. Consumer loan rates rose to 7.40%, up from 7.01% in June, while housing loan rates eased slightly to 3.87% from 3.95%. Corporate lending showed mixed movements: loans under €1 million fell to 4.29%, while those over €1 million climbed to the same level from 4.04%.

Meanwhile, deposit rates in Cyprus remain at rock-bottom levels. Household term deposits up to one year dropped to 1.08%, the second-lowest in the eurozone after Slovenia, compared to a bloc-wide average of 1.72%. Corporate deposits ticked up to 1.21% but remain the lowest in the monetary union. Excess liquidity, now exceeding €30 billion, continues to limit banks’ incentive to raise deposit rates. Total deposits stood at €56.6 billion in July, against €26.5 billion in loans.

Despite tighter borrowing conditions, new lending activity has surged in 2025. Between January and July, Cypriot banks issued €2.9 billion in fresh loans to households and businesses (excluding restructurings), up 42% from €2.1 billion in the same period of 2024.

• Business lending soared 57.8% year-on-year to €2 billion — the highest level since records began in 2005.

• Household lending climbed 18.1% to €971 million, marking the strongest performance in a decade.

Restructured loans also remained high: €1.6 billion for businesses and €510 million for households during the first seven months of 2025.

Despite the strong overall momentum, July marked a slowdown in new credit issuance. Net new loans fell to €445 million, down from €643 million in June, as housing loans and large corporate lending contracted sharply. The only exception was consumer lending, which posted a modest monthly rise to €24.9 million.

Comparisons with the eurozone reveal that Cypriot borrowers continue to face higher costs. In July 2025, household loan rates averaged 4.05% versus 3.96% in the euro area. Corporate loans stood at 4.31%, compared to the bloc’s 3.79%, placing Cyprus fifth-highest among eurozone members.

The CBC notes that strong liquidity continues to support banks’ ability to finance the economy, even as lenders maintain strict credit criteria. Corporate loan demand picked up in early 2025 for the first time since late 2021, driven by investment activity, while housing loan demand held steady and consumer credit demand declined.