Net new lending in Cyprus reached €4.85 billion in 2025, the highest on record, as lower interest rates drove households and businesses back to borrowing after years of subdued credit activity.
The figure represents a 26% annual increase from €3.85 billion in 2024, according to data released by the Central Bank of Cyprus, reflecting a broader trend of credit expansion following the gradual easing of monetary policy from mid-2024.
Housing loans led the surge, climbing to €1.34 billion from €1.02 billion the previous year. The Central Bank attributed this to steady demand for homeownership, investment purchases and properties for short-term rental such as Airbnb, supported by strong tourism and an expansion in tertiary education that has brought more foreign students to Cyprus.
Business lending also rose sharply, reaching €3.25 billion compared with €2.43 billion in 2024. Consumer loans showed a more modest increase, rising to €263.5 million from €250 million.
Banks are operating with high liquidity levels and, after a period of restricted lending, are channelling funds back into the real economy without the excesses seen in previous cycles, the Central Bank data suggests.
The European Central Bank’s lending survey for the eurozone in January 2026 reported a continued slight increase in demand for business loans and credit lines. Improved housing market prospects were the main driver of mortgage demand, with banks expecting the trend to continue.
The ECB held interest rates unchanged for a fifth consecutive meeting yesterday, keeping the deposit facility rate at 2%, in line with forecasts by economists polled by Bloomberg.
Analysts and markets expect rates to remain at this level until the end of next year, with the likelihood of any increase during 2026 diminishing.
All indicators suggest the credit expansion trend will continue through 2026 as monetary conditions remain favourable.