Cyprus Sees Sharp Rise In New Mortgage Lending In May As Deposit Rates Remain Among Eurozone’s Lowest

New mortgage lending in Cyprus rose sharply in May 2026, highlighting continued demand for housing finance despite elevated borrowing costs. Net new housing loans increased to €145.5 million from €106 million in April, according to the Central Bank of Cyprus.

Overall Lending Gains Momentum

Net new lending across all categories reached €361.9 million in May, up from €331.3 million a month earlier, reflecting stronger credit activity among both households and businesses.

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Mortgage Rates Continue To Rise

The average interest rate on new housing loans increased to 4.06% in May from 3.73% in April, as demand for residential financing remained resilient despite higher borrowing costs.

Consumer And Small Business Lending Expand

Consumer lending also strengthened, with new loans rising to €23.9 million from €21.8 million in April.

Lending to non-financial corporations for amounts up to €1 million climbed to €63.4 million from €39.4 million, while loans exceeding €1 million declined to €121.5 million from €156.8 million, pointing to softer activity among larger corporate borrowers.

Borrowing Costs Show Mixed Trends

Interest rates moved in different directions across lending categories. Consumer loan rates eased to 6.95% from 7.19%, while rates on business loans of up to €1 million edged higher to 4.27%. The average rate on loans above €1 million fell to 3.85%.

Deposit rates also increased modestly. One-year household time deposits rose to 1.25% from 1.20%, while comparable deposits for non-financial corporations increased to 1.31% from 1.23%.

Deposit Rates Remain Among The Eurozone’s Lowest

According to the Central Bank of Cyprus, lending rates remain broadly in line with the euro area median. Deposit rates, however, continue to rank among the lowest in the eurozone, reflecting the banking sector’s strong liquidity position.

Borrowers Shift Toward Fixed-Rate Mortgages

Borrowers continued to favour longer fixed-rate mortgages in May. Loans with variable rates or an initial fixed-rate period of up to one year accounted for 17.8% of new housing lending, down from almost 100% at the beginning of 2022.

The shift reflects a growing preference for payment certainty as households adapt to a higher interest-rate environment.

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ECB Orders Eurozone Banks To Prepare For AI-Driven Cyber Threats

by THEFUTURE.TEAM

July 8, 2026

The European Central Bank has given eurozone banks until October 31 to submit plans outlining how they will defend against AI-enabled cyber threats, reflecting growing concern among regulators over the impact of artificial intelligence on financial stability.

Regulators Raise The Alarm On AI-Powered Cyber Risk

The ECB’s directive comes as increasingly sophisticated AI models are expanding cyber capabilities, raising concerns about the resilience of critical financial infrastructure.

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Some frontier AI systems, including Anthropic’s Mythos, have become so capable that access to them has been restricted, a limitation that currently applies to eurozone banks.

“These developments have potentially profound implications for the confidentiality, integrity and resilience of banks’ information and communication technology (ICT) systems,” the ECB said in a letter to bank chief executives.

Focus Shifts To Critical Systems

The central bank instructed lenders to prioritise internet-facing systems and other critical technology assets, including third-party software and open-source components. It also called for faster vulnerability management, stronger monitoring capabilities and improved cyber hygiene.

Beyond technical safeguards, the ECB urged banks to modernise ageing infrastructure and strengthen crisis management, recovery planning and information-sharing arrangements.

To support the initiative, the ECB has postponed a separate IT survey and said it may adjust inspections and other supervisory activities.

Cybersecurity Becomes A Financial Stability Issue

In a separate warning issued alongside the ECB’s letter, the European Systemic Risk Board (ESRB) said large-scale cyberattacks could undermine confidence in financial institutions and, in severe cases, trigger runs on banks or jurisdictions perceived as less secure.

“The ESRB considers these developments to be a source of systemic risks to the financial system,” the board said.

The report outlines a range of scenarios, from gradual losses of confidence in individual institutions to coordinated attacks targeting payment, clearing and settlement systems, potentially amplified by disinformation campaigns.

According to the ESRB, cyber incidents could spread rapidly through shared software providers and common technology platforms, allowing a single breach to escalate into a broader financial disruption.

A Growing Priority For Banks

The ECB’s latest guidance underscores how cybersecurity is becoming a core prudential issue rather than simply an operational concern.

As banks deepen their reliance on digital infrastructure, cloud services and third-party technology, regulators increasingly view cyber resilience alongside capital, liquidity and risk management as a key pillar of financial stability.

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