Borrowing costs for new homes in Cyprus saw a notable uptick at the start of the year, with the highest available mortgage rate climbing to 3.41% in January 2026. Data released by the Central Bank of Cyprus (CBC) highlights a general upward trend in lending rates, even as the island’s average remains more affordable than much of the Eurozone.
According to the CBC’s monthly report, the peak rate rose from 3.25% in December, while the market’s entry-level rates also shifted upward from 2.39% to 2.50%.
Lender Comparison: Who Offered What in January?
The CBC’s breakdown of new contracts for Eurozone residents shows a competitive but tightening landscape among the island’s major financial institutions.
Top Mortgage Rates (New Business):
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Housing Finance Corporation: 3.41% (Highest recorded)
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Bank of Cyprus: 3.23%
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Ancoria Bank: 3.10%
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Alpha Bank Cyprus: 2.86% (Lowest recorded)
Despite the internal rise, the average mortgage rate in Cyprus stood at 3.04%, notably lower than the 3.39% average seen across the broader Eurozone.
Corporate and Commercial Lending
The trend extended into the business sector, particularly for large scale financing. For loans to non-financial corporations exceeding €1 million, interest rates showed a wider spread:
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Bank of Cyprus: 4.72%
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Alpha Bank Cyprus: 3.82%
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Ancoria Bank: 3.42%
Savings and Deposit Returns
While borrowers faced higher costs, savers saw mixed results in January. Term deposits for households and corporations remained relatively low, reflecting a market with high liquidity.
Household Term Deposits (Up to 1 Year):
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National Bank of Greece (Cyprus): 1.67% (Highest)
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Ancoria Bank: 1.46%
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Housing Finance Corporation: 0.85% (Lowest)
Corporate Term Deposits (Up to 1 Year):
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National Bank of Greece (Cyprus): 1.71% (Highest)
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Bank of Cyprus: 1.45%
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Housing Finance Corporation: 0.67% (Lowest)
Market Summary
The January data suggests that while the era of rock-bottom interest rates is transitioning, the Cypriot banking sector continues to offer a discount compared to continental European peers. However, with the peak mortgage rate now crossing the 3.4% threshold, the gap between local and Eurozone borrowing costs is beginning to narrow.
Source: news.cyprus-property-buyers.com