Cyprus is experiencing an increased convergence of average interest rates for both deposits and loans with the corresponding averages across the Eurozone. The Central Bank of Cyprus (CBC) announced this development in a recent press release, noting the trend reflects a maturing in the domestic financial environment.
Deposit Rates Show Significant Difference
Despite the overall convergence trend, Cypriot bank deposit rates remain noticeably lower than the Eurozone average, offering less return to savers:
| Deposit Category (New Business, ≤ 1 Year) | Cyprus Average | Eurozone Average | Differential |
| Household Fixed-Term Deposits | 1.10% | 1.74% | 0.64 ppt lower |
| Corporate Fixed-Term Deposits | 1.24% | 1.90% | 0.66 ppt lower |
The data confirms that monetary financial institutions (MFIs) in Cyprus offer significantly lower returns on fixed-term deposits compared to their Eurozone counterparts.
Loan Rates Show Closer Alignment
In contrast to deposits, lending rates demonstrate a much closer alignment with the Eurozone averages, particularly for households:
- Housing Loans (Households): The average interest rate for new housing loan contracts in Cyprus stood at 3.03%. This is very close to the Eurozone average of 3.34%.
- Corporate Loans: Rates for non-financial corporations vary based on the loan size:
- Loans up to €1 million averaged 4.20% in Cyprus.
- Loans over €1 million averaged 3.84% in Cyprus.
Enhancing Transparency
To promote greater transparency in the banking sector, the CBC has begun publishing detailed interest rate data for individual credit institutions as of July 2024. The Central Bank states that this monthly publication provides households and businesses with direct access to more comprehensive information, allowing for easier comparisons when making borrowing and saving decisions.
Source: Stockwatch.com.cy