Cyprus’ savers continued to receive some of the eurozone’s lowest deposit rates in September 2026, despite a monthly increase in returns. Borrowing costs, meanwhile, remained broadly comparable with those elsewhere in the currency bloc, according to the Central Bank of Cyprus (CBC) and the European Central Bank (ECB).
The gap reflects the high liquidity in Cyprus’ banking sector, which limits banks’ need to compete for deposits and weakens the pass-through of market-rate changes to savers.
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Deposit Rates Remain Below Eurozone Levels
The average rate on new household deposits with a maturity of up to one year rose to 1.62% in September, from 1.35% in August. For businesses, it increased from 1.56% to 1.70%.
However, both rates remained among the lowest in the eurozone. Cyprus’ Liquidity Coverage Ratio reached 305%, compared with an EU median of 182%, highlighting the banking sector’s substantial liquidity.
By contrast, changes in monetary policy rates have been passed on to borrowers broadly in line with other eurozone countries.
Borrowing Costs Show Mixed Trends
The average rate on new housing loans in Cyprus fell to 3.88% in September, from 4.16% in August, placing it below the eurozone median. Consumer loan rates also declined, from 7.12% to 6.45%.
Business borrowing became more expensive. Rates on new loans of up to €1 million rose to 4.76%, while those exceeding €1 million increased to 4.40%.
Across the eurozone, the average cost of new business borrowing increased to 3.90%, while housing loan rates remained broadly unchanged at 3.62%.
New Lending And Borrower Preferences
Pure new lending in Cyprus more than doubled in September, reaching €596.2 million, compared with €251.4 million in August. The increase was particularly strong in business loans exceeding €1 million, which rose to €376.7 million from €77 million.
The CBC also reported a shift away from variable-rate borrowing. Their share of new housing loans fell from almost 100% in early 2022 to 9.8% in September 2026. Across new lending to households and businesses, the proportion declined to 73.8%.
Deposit Returns Remain The Main Gap
September’s figures highlight the imbalance in Cyprus’ banking sector: borrowing costs broadly reflect eurozone trends, but savers continue to receive relatively low returns. Despite recent increases, substantial bank liquidity means deposit rates remain well below those available elsewhere in the currency bloc.







