Cyprus housing loan rates dropped to their lowest level in two years in December, narrowing the gap with the eurozone to just 0.23 percentage points and making home ownership more accessible for young couples.
The interest rate for housing loans fell to 3.78% in December 2025, down from 3.86% the previous month and 4.75% a year earlier, according to data from the Central Bank of Cyprus and the European Central Bank. The rate has fallen nearly a full percentage point in 12 months and is 1.37% cheaper than in 2023.
The eurozone average stands at 3.55%, meaning Cyprus now sits just 0.23 percentage points above the European benchmark. Belgium has the highest housing loan rate at 4.18%, whilst Malta has the lowest at 2.38%.
Business borrowing costs also fell sharply. For loans to non-financial corporations up to €1 million, the rate dropped to 4.32% in December, down from 5.16% a year earlier and 5.62% in December 2023—a fall of 1.3 percentage points in two years.
For business loans above €1 million, the rate fell to 4.42%, compared with 5.11% in December 2024. The comparison with 2023 is even more favourable, with rates down 1.25 percentage points.
The Central Bank noted that housing loan portfolios comprise various loan types—first homes, holiday homes—which carry different risk profiles and interest rates.
The weighted average rate is affected by monthly changes in portfolio composition, regardless of whether banks raise or lower their rates.
Whilst loan rates have fallen, Cyprus deposit rates remain the lowest in the eurozone—despite Cypriot banks having some of the highest liquidity levels in Europe.
The Central Bank attributes this to exceptionally high bank liquidity: Cyprus’s Liquidity Coverage Ratio stood at 319% in December 2025, compared with the EU median of 191% and average of 161% in September 2025. The small scope of the Cyprus banking market may also be a factor.
The interest rate for household term deposits up to one year rose to 1.20% in December, up from 1.13% the previous month but down from 1.74% a year earlier. The eurozone average is 1.85%. Greece has the lowest rate at 1.09%, followed by Cyprus and Slovenia at 1.20%.
Corporate deposit rates rose to 1.27% in December, up from 1.17% the previous month and down from 1.73% in 2024. Cyprus has the lowest corporate deposit rate in the eurozone.