Interest rates in Cyprus moved in opposite directions in July 2026, with deposit returns falling while housing loan costs increased. The banking market remained more attractive for savers than the euro area average, while borrowing costs were also below the bloc-wide level.
According to the Central Bank of Cyprus (CBC), the average rate on new household deposits fell to 1.27% from 1.42% in June. At the same time, the average rate on new housing loans rose to 3.24% from 3.18%, compared with euro area averages of 2.10% for deposits and 3.54% for housing loans.
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Deposit Rates Continue To Ease
The CBC data cover every credit institution operating in Cyprus and refer to new euro-denominated deposits from euro area-resident households.
For deposits with an agreed maturity of up to one year, National Bank of Greece offered the highest household rate in July at 1.62%, slightly below 1.64% in June. Alpha Bank followed at 1.45%, up from 1.39%, while Eurobank and Societe Generale each offered 1.32%. Eurobank had paid 1.51% in June, while Societe Generale had offered 1.12%.
For corporate customers, Ancoria Bank offered the highest deposit rate at 1.94%, up from 1.60% in June. Alpha Bank followed at 1.66%, compared with 2.05% the previous month.
Housing Loan Costs Move Higher
The average interest rate on new euro-denominated housing loans to euro area-resident households rose to 3.24% from 3.18% in June, regardless of the initial rate-fixing period. The CBC said the figure covers new business and new loan agreements.
Even so, Cyprus remained below the euro area average of 3.54%. Among the institutions covered by the CBC data, Societe Generale recorded the highest household housing-loan rate at 3.55%, although no comparable June figure was available. Bank of Cyprus followed at 3.37%, up from 3.28%, while the Housing Finance Corporation recorded 3.31%, down from 3.36%.
The average rate on new loans of up to €1 million to companies also increased, reaching 4.51% from 4.16% in June.
Among lenders, Banque SBA reported the highest rate at 6.99%, followed by Societe Generale at 4.99% and Ancoria Bank at 4.79%.
A Banking System Rebuilt, But Debt Remains
The latest figures come against a broader backdrop of progress in Cyprus’ banking sector, where non-performing loans have fallen sharply in recent years. Yet the country’s wider private debt burden has not disappeared.
In an analysis published by the CBC, Xenios Socratous of the central bank’s risk analysis section said Cyprus had undergone a major transformation, moving from NPL levels that once approached half of total lending to a banking system whose asset-quality indicators are now broadly aligned with the EU average.
Socratous argued that the NPL problem was not simply a banking ratio but a broader macroeconomic constraint. High levels of bad loans tied up bank capital and limited banks’ ability to finance the economy, while heavily indebted households and businesses delayed spending and investment.
The clean-up involved stronger provisioning, dedicated arrears-management units, legal reforms, restructuring, debt-for-asset swaps and the sale of NPL portfolios, including Bank of Cyprus’ Project Helix. These measures helped strengthen bank balance sheets and release capital for new lending.
However, moving loans off bank balance sheets did not make the underlying debt disappear. Credit-acquiring companies now hold most problematic exposures, leaving borrowers with outstanding obligations and ongoing restructuring or recovery procedures, while unresolved NPLs can continue to weigh on the property market.
“Selling NPLs improves banks’ balance sheets, strengthens investor confidence and releases capital for new lending. The underlying credit risk, however, does not disappear. It is transferred to another creditor,” Socratous said.
Housing Security Returns To The Policy Agenda
Household debt has also returned to the European banking debate, with particular attention to vulnerable borrowers and primary residences. Cypriot MEP Michalis Hadjipantela has urged the Association of Cyprus Banks to strengthen protections for borrowers who have already repaid a substantial share of their mortgages but remain at risk of losing their homes.
His letter was also sent to the CBC and the European Central Bank, following European Parliament-backed provisions calling for adequate protection of primary residences, particularly for vulnerable households.
