Cyprus’s interest rates are gradually approaching levels last seen a decade ago, though significant gaps remain in some lending categories, according to Central Bank of Cyprus data analysed by Phileleftheros.
Recent statements from European Central Bank officials suggest current interest rates are at the “right level,” with ECB data showing eurozone inflation slightly below 2% for 2026 and a possible small increase in 2027.
Further rate cuts below 2% should be ruled out at this stage, sources said. Such a move would only be justified by a sharp dive in the European economy in 2026—something not on the horizon—limiting the scope for new rate reductions.
For 2026, the forecast is for stabilisation after a period of increases, with the ECB focusing on maintaining economic growth and stabilising inflation below 2%.
Housing loans inch towards 2015 benchmark
The interest rate for housing purchase loans increased to 3.86% in November 2025, compared with 3.73% the previous month, according to Central Bank data.
A decade ago, in November 2015, the average housing loan rate for new business stood at 3.28%, rising slightly to 3.34% the following year. Today’s average housing rate remains clearly lower than the 5.10% recorded in 2024.
However, for prospective customers to benefit from the 2.20% to 2.50% rates credit institutions offered from 2017 to 2021, the ECB would need to make bold cuts and bring the reference rate down from 2% to zero.
Consumer loans remain expensive
The interest rate for consumer loans, a popular form of borrowing, increased to 6.95% in November 2025, compared with 6.88% the previous month. But reaching the 4.33% level of November 2015 will require considerable effort.
This rate climbed to 6% from mid-2023, reaching as high as 8% in October 2024. There were better periods in between, with consumer loan rates hovering around 3% in 2021.
Business borrowing costs mixed
The business sector presents a mixed picture. The interest rate for loans to non-financial corporations up to €1 million remained unchanged at 4.39% in November 2025, compared with the previous month.
Today’s business borrower is in an advantageous position compared with a decade ago, when the rate stood at 4.74% in November 2015. The sharp rise in this loan category began in mid-2023, climbing above 5% and peaking at 6.01% in November 2023.
For loans above €1 million, the rate increased to 4.50% in November 2025, compared with 3.69% the previous month, due to the prevalence of higher-risk loans. A decade ago, in November 2015, businesses could borrow at a clearly lower 3.88%.
Borrowing costs in this category began rising in January 2023 and frequently exceeded 6% through 2024.
Depositors forget high rates
Undoubtedly, the best year for depositors was 2008, when the average rate banks offered for household deposits up to one year reached 6.03% and for businesses 4.81%.
Depositors are unlikely to see such rates for the next 10 years if banks maintain their excess liquidity, as credit institutions won’t need to pay high interest to attract deposits.
The Central Bank reports that the rate for household term deposits up to one year increased to 1.13% in November 2025, compared with 1.07% the previous month. A decade ago, in November 2015, the average household deposit rate stood at 1.51%.
From 2018 until August 2023, the average deposit rate remained below 1%. Subsequently, amid political reactions and pressure, the average rate exceeded 2%. The biggest declining trajectory began in January 2025, bringing rates to current levels.
The corresponding rate for deposits from non-financial corporations fell to 1.17% in November 2025, compared with 1.23% the previous month. In November 2015, the deposit environment was more favourable, with an average rate of 1.53%.
From 2019 until March 2023, the average market rate stayed below 1%. The major upward turn began in October 2023, with business deposit rates exceeding 2% and reaching 2.5% in March 2024. By November 2024, it had retreated to 1.99%, and the trajectory has been downward since.