Cyprus deposit rates remain lowest in euro area in July

Nicosia, Cyprus. Cyprus borrowing rates were broadly in line with the euro area median in July, while deposit rates remained the lowest in the euro area, according to the Central Bank of Cyprus.

The central bank linked the divergence in deposit rates to the high liquidity of Cyprus banks and the relatively small domestic banking market.

Household and corporate rates

The interest rate on new housing loans fell to 3.78 per cent in July from 4.04 per cent in June. The rate on household deposits with an agreed maturity of up to one year declined to 1.27 per cent from 1.42 per cent.

The rate on deposits from non-financial corporations rose to 1.56 per cent from 1.41 per cent.

Consumer loan rates increased to 6.94 per cent from 6.50 per cent a month earlier.

For non-financial companies, the rate on loans of up to €1 million rose to 4.47 per cent from 4.32 per cent, while the rate on loans above €1 million increased to 4.29 per cent from 4.07 per cent.

Comparison with euro area

For existing loan balances, Cyprus rates were close to the euro area median, with household rates standing 0.1 percentage points below the median and rates for non-financial companies 0.3 percentage points above it.

The Central Bank of Cyprus said the transmission of both monetary tightening and easing to existing loans was broadly aligned with other euro area countries.

For new housing loans, the weighted average rate was 0.2 percentage points below the euro area median. The corresponding margin for non-financial companies was 0.3 percentage points above the median.

The central bank said the transmission to new corporate loans appeared weaker in Cyprus during both monetary tightening and easing.