Cyprus savers earn little as new mortgage costs jump to 4.16%
Central Bank of Cyprus data for August 2026 show deposit rates near the bottom of the euro area while the average rate on new home loans climbed sharply from July.
Households on the island are getting among the weakest returns on their savings in the eurozone, according to the Central Bank of Cyprus. As reported by Cyprus Mail, the rate paid on new household deposits with a maturity of up to one year edged up to 1.35 per cent in August 2026 from 1.27 per cent a month earlier, while the average rate on new house purchase loans leapt to 4.16 per cent from 3.78 per cent.
The central bank links the low deposit rates to the large stock of excess liquidity held by Cypriot lenders — the Liquidity Coverage Ratio stood at 313 per cent in August 2026, against an EU median of 182 per cent and an average of 158 per cent in June 2026 — and to the short maturity structure of the banking sector. Pass-through of market rate moves to depositors is weaker than in almost every other euro area country, for households and firms alike, though rates on existing loans sit close to the euro area median.
Borrowing also slowed sharply: pure new lending fell to €251.40m in August from €415.00m in July, with pure new house purchase loans down to €114.40m from €149.50m. Consumer credit rates rose to 7.12 per cent from 6.94 per cent, while loans above €1m to businesses became cheaper, dropping to 3.67 per cent from 4.29 per cent.
What it means for residents
The gap between what savers earn and what borrowers pay is widening, so anyone with money sitting in a term deposit is effectively losing ground, while those about to sign a mortgage face a noticeably bigger monthly instalment than in July.
- Check your deposit terms. With rates near the bottom of the euro area, it is worth comparing what different banks offer before renewing a fixed-term deposit.
- Budget for dearer mortgages. New home loans averaged 4.16 per cent in August, and the central bank notes the figure is a weighted average that can shift with the mix of loans banks write.
- Shop around for credit. Consumer loan rates reached 7.12 per cent, but business borrowing above €1m became cheaper, so terms vary widely by product and borrower.
This text is written from the source article and is not a translation of it.
