Nicosia, Cyprus. Borrowing costs for businesses across the euro area increased in June, while mortgage rates were broadly stable, according to European Central Bank data. Deposit rates also rose, but Cyprus continued to offer comparatively low returns to depositors.
Euro area lending and deposit rates
The ECB said its composite cost-of-borrowing indicator for new corporate loans increased by 15 basis points to 3.79 per cent in June.
The equivalent indicator for new housing loans remained broadly unchanged at 3.51 per cent.
Banks across the euro area raised returns on deposits. The composite interest rate on new fixed-term corporate deposits rose by 17 basis points to 2.21 per cent, while the rate on new household fixed-term deposits increased by 13 basis points to 2.09 per cent.
Cyprus deposit rates
The Central Bank of Cyprus released its June interest rate data on Monday, showing that deposit rates in Cyprus also increased during the month but remained below euro area levels.
The interest rate on household deposits with an agreed maturity of up to one year rose to 1.42 per cent in June from 1.25 per cent in May. The corresponding rate for deposits by non-financial corporations increased to 1.41 per cent from 1.31 per cent.
Despite the increases, Cyprus continued to offer some of the lowest deposit rates in the monetary union.
Banking sector liquidity
According to the Central Bank of Cyprus, the weak pass-through of ECB monetary policy to depositors reflects structural characteristics of the domestic banking system, including high liquidity levels and the sector’s relatively small size.
Cyprus’ Liquidity Coverage Ratio stood at 310 per cent in June 2026, compared with a European Union median of 189 per cent and an average of 158 per cent. The central bank said this reduced competitive pressure on banks to raise deposit rates.
The Central Bank of Cyprus also said the transmission of both rising and falling ECB policy rates to deposits remained weaker in Cyprus than in almost every other euro area country for households and businesses. Lending rates in Cyprus remained broadly aligned with those elsewhere in the euro area.
