Cyprus deposit rates remain among euro area’s lowest as new mortgage costs rise

Nicosia, Cyprus. Cyprus households continued to earn relatively low interest on bank deposits while facing a renewed rise in mortgage borrowing costs, according to Central Bank of Cyprus (CBC) data for August 2026. Deposit rates remained among the lowest in the euro area, while lending rates were broadly close to the euro area median.

Deposit rates remain low

The interest rate on new household deposits with an agreed maturity of up to one year rose to 1.35 per cent in August, from 1.27 per cent in July.

The CBC analysis found that Cyprus deposit rates were an outlier at the lower end of the euro area. The transmission of interest rate changes to deposits was weaker in Cyprus than in almost all other euro area countries, for both households and businesses.

The findings raise questions about the extent to which Cypriot savers are benefiting from higher interest rates compared with borrowers.

Lending rates close to euro area median

The picture for borrowers was more mixed, with interest rates on outstanding loans and new lending broadly close to the euro area median.

The interest rate on outstanding household loans in Cyprus was 0.1 percentage points below the euro area median, while the corresponding rate for non-financial corporations was 0.3 percentage points above it.

For new lending, the weighted average rate on household loans for house purchase was 0.2 percentage points below the euro area median. The rate for non-financial corporations was 0.1 percentage points lower.

New housing loan costs increase

The latest monthly figures nevertheless showed a significant increase in the cost of new mortgages. The average interest rate on new house purchase loans rose to 4.16 per cent in August, from 3.78 per cent in July.

The CBC stressed that this figure is a weighted average covering different types of housing loans, including mortgages for primary residences and holiday homes.

Changes in the composition of banks’ housing loan portfolios can move the weighted average from month to month, even when the underlying interest rates offered by banks do not necessarily rise or fall by the same amount.