Nicosia, Cyprus. Lending criteria for businesses and households in Cyprus remained unchanged in the first quarter of 2026 compared with the previous quarter, while net demand for loans increased across all categories, according to the latest bank lending survey by the Central Bank of Cyprus.
Banks expect lending criteria for both businesses and households to become more stringent in the second quarter of 2026, although net demand for loans is projected to remain stable.
Business lending conditions
The Central Bank of Cyprus said the overall terms and conditions for granting new loans or credit lines to businesses became more rigorous in the first quarter of 2026 due to reduced risk tolerance.
It said there was an increase in the bank margin, representing the difference against the relevant reference interest rate, specifically for higher-risk loans.
Household lending conditions
The overall terms and conditions for household loans, including housing and consumer credit, remained unchanged during the quarter, according to the report.
The central bank said this appeared to be linked to the continuing positive course of economic activity.
Loan demand trends
Net demand for business loans increased to meet funding needs for fixed investment.
For households, the net increase in demand for housing loans was attributed to rising consumer confidence, while increased demand for consumer and other loans was linked to higher expenditure on durable goods and improved consumer confidence.
Outlook
The Central Bank of Cyprus said the increase in loan demand, particularly from businesses for fixed investment and from households for consumption and housing, may be linked to the continuing resilience and adaptability of the Cypriot economy under conditions of continuing external uncertainty, as well as the resilience of the labour market.
